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Final Panel Report on Railway Reforms
Jun 16, 2015

The final report of the Bibek Debroy-headed panel on reforms in the Indian Railways has diluted its earlier stance on unbundling, but has pitched for putting in place a regulator at the earliest. 

According to the final report submitted to the Railway Ministry, unbundling of the Railways can be taken up at a later stage, after five years, instead of starting to work towards that aim now, as suggested in the interim-report. 

Key Recommendations

  • A major change (in the final report) has been the realisation that the stage is not right for the Railways to start unbundling. 

  • It has also suggested the eventual bifurcation of the two core functions of the railways, operations and infrastructure creation. 

  • The Committee has proposed opening up the sector to private companies, the establishment of a statutory regulator and scrapping the rail budget. 

  • The Railway Board itself might be pruned to having only five secretary-level officers from the present seven. 

  • It will be up to the regulator to decide technical standards, set freight rates and resolve disputes. 

  • The regulator can recommend fare revisions but these will not be binding on the railway ministry.

  • The regulator should be set up through the legislative route, not executive. Setting up a regulator will take up three years legislatively. 

  • A monitoring agency, supported by domain experts from outside the system should be constituted and a clear roadmap be drawn with timeframes for constituent activities. These reforms should be carried out in not more than two years.
     
  • The report has also suggested a three-pronged approach that the government should adopt beyond five years, including setting up Indian Railway Manufacturing Co., a special purpose vehicle that would house all the existing production units to protect them from the private sector.

  • Committee of Railway Safety should continue to be under the Civil Aviation Ministry, as is the case now, instead of being made a subset of the regulator. 

  • One should wait to see what the Railway Regulatory Authority of India achieves before setting up Indian Railway Infrastructure Corporation. 

  • On human resources, the committee had a discussion on whether there should be a single cadre or two cadres—engineering and non-engineering. At present, the Railways has multiple services, such as traffic, civil engineering, electrical engineering, accounts, stores, personnel, among others. 

  • The Committee suggests that the Dedicated Freight Corridor Corporation should be autonomous and separate from the Railways, and access rights should be equal for the Railways and private operators. 

  • Other proposals in the report include accounting reforms in two years, revising the dividend policy in one year, ensuring funding of public service obligation after accounting reforms are completed in about three-four years. 

  • The report also calls for Railways to focus on freight and e-commerce for resource mobilisation. 

Instead of an aggressive approach as was seen in the interim report submitted in March, the final report calls for more gradual changes. 


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