Rail reforms get vital roadmap

The Bibek Debroy-led eight member committee on railway restructuring has submitted its final report, and no one can accuse it of having held itself back. Beyond the headline-grabbing recommendation of doing away with the railway budget itself, the committee chairman has emphasised that the three building blocks of the report are the shift towards accrual accounting, streamlining of human resource (HR) practices, and appointment of an independent regulator. Decentralisation and an expanded role for the private sector are the other points of emphasis. The report highlights that a shift from the present cash-based accounting to accrual or commercial accounting is necessary to find the rate of return on projects and do cost-benefit analyses. Also, it’s needed for inflow of private capital because it’s the format which lenders and financiers understand. The report visualises an independent regulatory body set up statutorily – and not by fiat – and accountable to Parliament, tasked with setting access charges, tariffs, and mediating disputes.

After the five-year timeline set to bring in these changes, the report expects the Railway Ministry to only set policies, with enforcement entrusted with the regulator. The committee wants to make the railways attractive for private sector investments. It has welcomed private sector participation in running of both freight and passenger trains. Another proposal is for the unbundling of the railways into two separate organisations with one responsible for infrastructure, and another for operating trains. On decentralisation, Debroy has pointed out that given India’s diversity, it would be unfair to fit all 16 railway zones into a template created by Delhi. Therefore, the report envisages operational freedom for managers. Ultimately, the panel wants the Railway Board to be run like a corporate board, with its chairman exercising decision-making and veto functions like a CEO.

On HR, the report is clear that operating the Railway Protection Force (RPF) and special force (57,000-plus personnel), hospitals (125 hospitals; 56,000-plus staff), and schools (168), are not the railways’ core function. But trade unions fear that any such move towards pruning or outsourcing these functions could jeopardise jobs. The report is mindful of such concerns and looks to making the most of natural attrition through retirements. It cannot be expected that the separate tradition of railway budget, on since the 1920s, would be given up overnight by the political leadership. Also, diminution of the latter’s role to mere policy setting calls for much sacrifice. But give and take is the hallmark of democracy, and, therefore, it is not impossible to visualise a progressive government implementing much of the recommendations through a process of consensus.