Bibek Debroy Committee on Railway Restructuring

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13 Jun, 2015

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A committee headed by Bibek Debroy, vice-chairman of National Institution for Transforming India (NITI) Aayog, presented its final report to the Rail Ministry on 12 June 2015. The Debroy Committee was constituted in September 2014 by Prime Minister Narendra Modi with the objective of recommending ways to restructure the railways and make the resources at its disposal more valuable. The final report of the committee has recommended some radical measures to improve the railways.

Following are the important recommendations of the Bibek Debroy Committee –

1. Passenger Operations

The committee has recommended the entry of private players to run passenger trains. However, that doesn’t mean that they will also manage the tracks. The track management will be taken care of by a separate company working under the railways’ ministry’s fold. But the railways will have to handle private trains competing among themselves, and also with its own trains, to attract passengers. While there was talk of private sector role in freight, this is the first time a move is being made to bring it in the running of passenger trains. Apart from this the committee has also supported the entry of private companies in operation and maintenance of railways.

2. Independent Regulator

The committee recommended the setting up of a Railway Regulatory Authority of India (RRAI) with a separate budget and independent of the railway ministry. The regulator, as envisioned by the committee, would be independent of the rail ministry and have quasi-judicial powers with the function of tariff regulation, safety regulation, fair access regulation, service standard regulation and licensing and setting technical standards.

3. Railway Budget

The panel has also suggested the scrapping of a separate railway budget. The committee felt that Railways was just another public sector company. The concept of separate railway budget is seen as British colonial legacy which has lingered on for decades. This would also that by not having separate budget it would be easier to segregate the railways’ social responsibility (subsidizing passenger fares) from its operational finances. This would, in effect, result in the central government showing the subsidies on railway fares in the general budget – and the state governments will have to bear their part for sub-urban trains.

4. Employing Commercial accounting techniques

An important recommendation has been given with regard to switching over to commercial accounting of railway functions, corporatization of railways production units and involving private sector in manufacturing coaches, wagons and locomotives. It is worth mentioning that till now the railway had focussed on expenditure accounting to gauge operational efficiency.

5. Non-core operations

The committee has backed the idea of separating the Railways’ unremunerative activities, such as running schools, hospital, stadia, catering, real estate development and its huge security set up, RPF, from the core business of the railways. The railways run some of the biggest hospitals and schools across the country.

6. Organisational Structure

Commenting on the organizational structure of the railways, the committee has said that it has become an overly centralized and hierarchical organization. Its departments worked in separate silos and that has adversely affected the work culture. The panel suggested rewriting of some of its staffing rules in order to attract outside talent and restructure the house along business units for ushering in efficiency. The committee noted that the silo structures of the eight Group – A services within railways has led to departmentalism which has snapped the spirit of team work. He has suggested two feasible options for addressing the issue: amalgamation of all existing services into a single unified Railways Service or merging the eight services into two separate services – Indian railways Technical Service and Indian Railways Logistics Service. The committee has recommended the second option.

7. Private participation

The committee stressed that it was not recommending privatization (in the sense of sale of equity) of the railways. The committee noted that private sector participation in railways has been muted when compared to other sectors such as ports, telecom, airports and roads. It found that one of the main reasons was that the same organization dealt with the three prime functions – policy making, regulatory functions and operation.

8. Speedy Completion of Projects

For speedier execution of projects and to cut time and cost run, the committee suggested that construction organizations working at zonal railways must be brought under the umbrella of one or more PSUs such as RVNL, IRCON etc. It has also strongly recommended decentralisation of decision-making to empower divisional and zonal railway managers.


What is the attitude of Railway Unions towards the Report of Debroy Committee?

Bibek Debroy committee’s recommendation to allow private players in Railways has met with strong opposition from employees’ union. The All India Railway Federation on 12 June announced its decision to observe black day on 30 June 2015 all over the country by wearing black badges. On its part, the committee observed that said it is not recommending privatisation of Railways by means of sale of equity but endorses private entry with the provision of an independent regulator.


Full name of the Committee

Committee for Mobilization of Resources for Major Railway Projects and Restructuring of Railway Ministry and Railway Board

Chairman of the Committee : Bibek Debroy (Vice-Chairman, NITI Aayog)

Other 7 members of the Committee:

K M Chandrasekhar (Former Cabinet Secretary)

Ravi Narain (Former MD National Stock Exchange)

Gurcharan Das (Former CMD Proctor and Gamble)

R. Kashyap (Former Financial Commissioner, Railways)

Partha Mukhopadhyay (Senior Fellow, Centre for Policy research)

Ajay Tyagi (Additional Secretary, Department of Economic Affairs)

Ajay Narayan Jha (Additional Secretary, Department of Expenditure)


 

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