Maharashtra government must share rail profits and losses: Committee

The Bibek Debroy committee, set up for mobilising resources for major railway projects among other matters, has come out with an interim report with this suggestion

Mumbai’s suburban railway system carries a humongous number 79 lakh of commuters every day, in over 2,800 train services. Despite this, the Western and Central railways suffer losses to the tune of over Rs 1,500 crore annually.

Despite lakhs of commuters in Mumbai, the Western and Central railways suffer losses to the tune of over Rs 1,500 crore annually. File pic
Despite lakhs of commuters in Mumbai, the Western and Central railways suffer losses to the tune of over Rs 1,500 crore annually. File pic

Now, the Indian Railways-appointed Bibek Debroy committee has come out with an interim report, wherein it has suggested that the state government should be an equal partner in sharing the losses and profits of the suburban rail.

Sources said that previous reports and talks among authorities have mentioned separating Mumbai from the rest of the railway system. However, this suggestion of state governments and Indian Railways being party to overall operating and maintenance of suburban rail has been given for the first time.

The railway officials explained that every time the Union Railway Budget announces a fare hike in suburban trains, there is opposition from various quarters. The best example was the fare hike in season passes and tickets, which was rolled back after protests.

“There is a marginal hike in season passes only because there is a hike in service tax. Our rail system is the cheapest in the world,” said a senior rail official.

Share losses and profits
The committee has also suggested a workable methodology for arriving at the operating and maintenance costs of the Mumbai suburban railway system, which will involve separation of Mumbai suburban railway’s accounts from the accounts of Western Railway and Central Railway.

The committee has suggested the state government should be more proactive in sharing the losses and profits if any. Presently, there is a joint venture between the Maharashtra government and Indian Railways, in the form of Mumbai Rail Vikas Corporation (MRVC), in which the latter owns 51 per cent of the share.

The state government, until now, was sharing the cost for two phases of the Mumbai Urban Transport Project (MUTP); its share was around Rs 4,700 crore.

The reasoning behind the joint venture is that not only do suburban train services and station development need to be carefully attuned to local conditions, they should also satisfy many local regulatory requirements for example, environmental permissions etc.

“If these are separated as special purpose vehicles (SPVs) involving joint ventures (JVs) with the respective state governments, it will permit greater involvement by the states in the governance and provision of this service and permit it to be priced more appropriately,” the report says.

More joint ventures
A cell has already been established in the Railway Board to explore possibilities of such JVs between states and Indian Railways. Other suburban services in Chennai and Kolkata could be separated over the next two years, in preparation for inviting state governments as JV partners.

The tariff can be determined for local trains by the state governments. “Constructing new suburban lines should be undertaken by joint ventures and not otherwise,” stated the report. “The state government has been eager to hike fares of BEST, taxis, and autos, which happens very frequently.

It would be interesting to see what the fares are like, if these suggestions go through and if there are JVs with state governments,” said another senior railway official.

The report says
“Suburban railways should ideally be hived off to state governments, via the joint venture route. Until this is done, the cost of low suburban fares, if these fares are not increased, must be borne by state governments on a 50-50 basis, with MOUs signed with state governments for this purpose,” says the report.

The 320-page document was introduced on March 31, although it was finished by March 15, and was to be submitted as a proper report later this August. But, the committee members wanted the public and all other stakeholders to have a look at it and give suggestions.

The interim report is at Stakeholder comments and views will be considered for inclusion in the final report. You can email your inputs and suggestions and by April 30.

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