Either adopt UK’s Privatisation model or Restructure the Management. A ‘bit of both’ model won’t work: Former CRB

Vivek Sahai
Vivek Sahai

For the last three decades the Centre has been toying with the idea of restructuring Indian Railways. While the Railway Reform Committee (1981) headed by HC Sarin (it had Manmohan Singh as one of the members) had a detailed look at this issue and submitted its final report in 1985, the first serious study on changing the organisational structure as well as the ethos of the Railways was carried out by the Prakash Tandon Committee in 1994. Simultaneously, the Gupta-Narain Committee also examined the rationalisation of the management services the same year.

Subsequently, Rakesh Mohan, while submitting his report in 2001, delved into this issue at great length. In 2014, in his National Transport Development Policy Committee Report, he devoted considerable energy on suggesting means to invigorate the organisation. The High Level Railway Restructuring Committee headed by Bibek Debroy is another effort to streamline this mammoth organisation.

The Indian Railways plays a significant role in the life of every Indian. Reasonably then, every Indian has a right to worry about its efficient functioning and nurture the hope that it will ride a trajectory of unstinted growth.

Every government recognises this, and hence the plethora of committees. But, forming a committee is one thing; implementing its recommendations is another!

Contradictory views

The interim report of Debroy’s committee needs in-depth scrutiny not only of its recommendations, but also of how best they can be implemented.

The subject of restructuring is covered in seven chapters; the second chapter is devoted to liberalisation, the entry of private operators and the unbundling of the Railways into two separate entities — infrastructure and operating companies— almost on the lines of the restructuring of British Rail.

The very idea militates against the avowed policy of the government to abstain from any move towards privatisation.

On the other hand, Chapter 5 examines the issue of management cohesiveness of the organisation in great detail and proposes many far-reaching recommendations.

Yet, the contents of Chapters 2 and 5 are quite contrary to each other, and profess two different philosophies! If the committee is suggesting bringing in private players and having two separate entities as stated in Para 2.43 of the report, then Chapter 5 is redundant.

With the entry of private players, the Railway Management should reduce in size. It will need a different prescription for survival. It is a vexatious issue and will bring the government in direct confrontation with unions and associations of every kind.

With the inclusion of two mutually conflicting chapters, the report loses focus and emanates confusing signals. It is hoped that the final version will resolve this dichotomy.

What’s the timeframe?

The other important issue is the time-table for the implementation of the suggested reforms. There is an urgent need to arrange for the flow of funds, preferably through public-private partnership (PPP). The main obstacle here is the lack of trust among private players about the intentions of the Railway administration.

The esoteric Railway Budget cannot be comprehended by a layperson, leading to doubts in the minds of prospective investors. Accounting reforms — talks have been going on for more than a decade — can bridge this gap in perception. It would, thereofore, be better if accounting reforms saw a closure immediately.

Concomitantly, the Railway Board can be restructured to work on business lines instead of its present petty departmental approach, euphemistically termed ‘functional’. Both these targets are within the realm of possibility.

The report rightly roots for a regulator as a statutory body. Without a strong regulator in place, any possibility of introducing private players as operators will remain a dream. Putting a regulator in place within a year of implementation of the report will have a salutary effect on the atmosphere for investments in the Railways.

A cast iron case has been made out for concentrating on the core activities of the Railways as a transporter. Various suggestions are well thought out, but again, many of these may be unpalatable. Their fruition will depend more on whether the government has the stomach to push matters to their logical conclusion or not, and less on their propriety and desirability.

A holistic approach

The report can be commended for its holistic approach, barring the conflicting message on privatisation. Still, it can lay claim to being a complete package. If only some parts are finally accepted, it must be ensured that it does not leave gaping holes in the jigsaw puzzle.

This report is different from previous ones on two counts: first, it lays down a time-table for implementation, and second, it also lights a pathway to be followed for speedy and smooth implementation of its recommendations by way of “setting up of a strong formal implementation and monitoring mechanism…a dedicated cross-functional team be set-up in the ministry”. Debroy has termed this report a draft report. It is hoped the final report will take care of issues mentioned here so that the recommendations will help Indian Railways modernise itself without delay. Hopefully, the Centre will muster up the courage to change the working ethos of Indian Railways.

(The writer is a former chairman of the Railway Board. He was also associated with the National Transport Development Policy Committee’s report)