Various Railway Federations have been demanding a special dispensation for Railway employees keeping in view the profitability of their organisation.
The demand is not without substance especially as employees have to be rewarded for efficient performance of the entire organisation that has yielded continuous profits without resorting to any substantial increase in the passenger/freight fares in the recent years. A separate dispensation in terms of pay scales and allowances is not, however, possible, as long as the organisation continues to be a Ministry in the Central Government because it will then need to be governed by the common pay scales and allowances for the entire Central Government.
Various committees in the last 15 years including the Sixth Central Pay Commission have recommended the corporatisation of the Indian Railway to benefit its employees as well as to ensure better services to the common citizen.
The Sixth Central Pay Commission, which examined the demands of Railway employees for better pay scales and allowances in its report said, “The optimal solution would be corporatisation of Indian Railways as a Public Sector Enterprise. This would allow the Railways flexibility in determining its own compensation package”. This recommendation was not accepted by the government.
The Sixth CPC further said, “While privatization of Railways cannot be an option as Railways is and will continue to be a public utility service providing crucial infrastructure support for balanced economic growth of the country, corporatisation of Railways as a Central Government PSE is a viable option that will not only allow better use of Railway assets along with higher quality of service and greater emphasis on profitability but also be able to compensate the Railway employees adequately for the increased profits that they are able to bring for the organization”.
The only argument that can be used against corporatisation is that it may lead the Railways to go for profitability as its primary object without catering to the benefit of the general public. Another negative point of such corporatisation usually projected is that in times of national emergency like external aggression etc. the government may no longer be assured of full cooperation from Railways in case it is corporatised.
The Sixth CPC said, “There is not much substance in these arguments because even as a public sector undertaking, the railways would still belong to the public domain with the only difference that the government then would need to provide upfront compensation to the Railways for any social project taken up by the Railways in advancement of governmental policies. Corporatisation would raise the productivity of services provided by the Railways as it would then be relatively free from governmental control. The Workers, Managers and Executives in Railway organization would then be free to raise the productivity of their organisation and participate in its increased profitability. This will not only benefit the employees in Railways but also the common citizens as increased productivity of Railways will ensure better services to the common citizen”.
Many earlier reports like the World Bank Report of 1995 suggested rail reforms through unbundling of disparate service and equipment providers into coherent focused corporate entities whether in the public or in private domain. As per Rakesh Mohan Committee Report, eventual corporatisation of the Railways has to be the final goal for converting the Railways into an outward looking, business oriented and customer-driven institution.