How to bring railways on track: Privatisation or restructuring?

  • Hindustan Times, New Delhi
  • Updated: Jun 15, 2015 16:34 IST

The Bibek Debroy committee on the restructuring of the Indian Railways has made it clear that the organisation requires an investment of an amount that cannot be entirely provided by the public exchequer. In fact, railway minister Suresh Prabhu had underscored the need for heavy investment in his budget speech this year. This is all the more important because the government has to shoulder the burden of the enhanced salaries and pensions of central government employees after the Seventh Pay Commission gives its report. The panel has stuck to its earlier stand of opening the door to the private sector in specific areas. For example, it would be a good idea to have private parties investing in rolling stock, and going by the recommendations of the panel, the best thing would be to allow them to establish their own units and then sell their products to the Railways.

But the devil is always in the detail. As land acquisition is turning out to be increasingly difficult, it is questionable how far any private party would be interested in track laying. The same is true for signalling. Also the suggestion that there should be a railway regulator has to be looked at cautiously because such a body might encroach upon the powers of the railway board. Though the panel has proposed the reorganisation of the railway board and the Group A railway services, it is not clear at this stage what shape these suggestions might take. It was predictable that there would be a proposal for the Railways to withdraw from its non-core activities such as running schools and hospitals, but the dominant thinking is that every public organisation, including the police and the defence services, should undertake such work. The panel would have done well to suggest how these could be run better. Similarly, it could have avoided suggesting that state governments pay for the maintenance of the General Railway Police.

Avoiding the suggestion of privatising the Indian Railways, or any of the public sector units under it, has been the signature of the report. Allowing private companies to set fares would not be a good thing because the operators would then ask for a free hand and would have run into frequent problems with the regulator. This could cause the government considerable embarrassment because this is an area that is highly sensitive politically.

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