Panel for private players in railways; end of separate budget

New Delhi: A whole set of reforms like entry of private players, separation of off-line activities from core business, establishment of a regulator to decide on tariffs and an end to the practice of a separate budget have been recommended to revamp the cash-strapped railways.

Holding that the railway finances were in a precarious situation, the committee headed by Niti Aayog member Bibek Debroy, says that there is need not only to improve the internal resource generation and explore varied methods of financing but also to improve utilisation of available resources.

The committee, a brainchild Prime Minister Narendra Modi, has in its over 300 page report, says it does not recommend privatisation of Railways but railway unions have attacked the report saying it is a clear road map for privatisation of Railways which would endanger safety and increase financial burden.

"It does, however, endorse private entry, which is not ab initio but ab hinc -- as this is already part of the Indian Railway policy -- with the proviso of an independent regulator. "This committee prefers use of the word liberalisation and not privatisation or deregulation, as both the latter are apt to misinterpretation," it said.

In a major recommendation, it has proposed separation of activities like running of hospitals, schools, catering, real estate development, manufacturing of locomotives, coaches and wagons from the core business of running trains.

State governments should be asked to entirely fund Government Railway Police (GRP) and the general managers should have the freedom to choose between private security guards and RPF for security on trains. The committee has strongly recommended establishment of an independent regulator -- Railway Regulatory Authority of India (RRAI) -- with a separate budget and to be independent of the Ministry.

"The RRAI will have the powers and objectives of economic regulation, including wherever necessary tariff regulation, safety regulation, pair access regulation, service standard regulation, licencing and enhancing compensation and setting technical standards.

"Once the changes of the first five years are implemented, including the resolution of the social cost issue, the Railway Budget should be phased out with gross budgetary support to Indian Railways mentioned as a paragraph in the Union Budget and no more," it said.

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