Private participation in Railways, not Privatisation: Bibek Debroy

There are 8,000 stations on the railway network. Of these, from a revenue point of view, there will be just about 20 stations.  It is our duty to turn it into profits, said Bibek Debroy

Niti Aayog Vice-Chairman Arvind Panagariya will be suggesting a Roadmap for the Creation of the Rail Regulator.  The Model is already there, said Bibek Debroy 

Bibek DebroyThere have been multiple reports on the Indian Railways during the current NDA regime. While railway minister Suresh Prabhu ruled out any attempt at privatisation, he has initiated steps that could facilitate the entry of private investment in many areas of railway operations, including running of trains. Niti Aayog member Bibek Debroy, who heads the committee on revamping the railway’s operations, which has suggested an elaborate framework for this, says the chances of implementing measures to change the way the railways has been run for years are much better now than in the past. He explains Santosh Tiwari and Anup Jayaram how the NDA government is moving ahead with the job. Excerpts:

Do you think the suggestions to increase private sector participation in the railways have been wrongly perceived as privatisation?

Our interim report talks about facilitating private sector entry in various aspects of railway operations. I think I made a mistake which I will rectify in the final report. Chapter 1 is the introduction and Chapter 2 is on privatisation, while Chapter 3 is specific to Indian Railways. The chapters are written by individual members, which I put together.

In terms of logical sequencing, the current Chapter 2 should come at the end. We should talk about Indian Railways first and then about the problems.

So, the solution, the privatisation part, will be towards the end in the final report. Isn’t it?

Yes, the private entry part and not privatisation. We have not mentioned privatisation anywhere and this should be very clear.

The chapter on the entry of private sector will go at the end. We shall do that in the final report, which will be out by end-June.

The four major points in our report relate to commercial accounting, track access, decentralisation and independent regulator. Most people do not have any problems with these issues.

You have suggested far-reaching changes in the railway workforce. There have been some concerns on this count…

The genuine concern is that the people who should actually be upset are, oddly enough, not upset, which is the Railway Protection Force (RPF). The only people who are upset, apart from Railway Board members, are the Railway Board Secretarial Services. They are really upset.

We have called a meeting of the Divisional Railway Managers (DRMs)—not all of them, but 15 or 20. We need to get the reactions of the DRMs who, in fact, represent the railways.

The proposed rail regulator is supposed to balance the interests of the private sector and the public. Will the role of the railway regulator be primarily recommendatory or will it be binding?

We have said that the regulator should be accountable to Parliament and that it should be binding except for passenger fares. Access to tracks, freight tariffs and standards will be binding. For passenger fares, we said the market still does not exist, or the market is not mature enough; so, it is recommendatory. But otherwise it is binding, and has an independent budget. That is the essence of it. We have also said the social costs should be worked out.

The regulator will also vet the calculations. The problem, however, is how do you have people with the requisite capacity.

The railway minister has now entrusted the job of suggesting a model for the rail regulator to the Niti Aayog vice-chairman Arvind Panagariya. Will this be different from what you have suggested?

He will be suggesting a roadmap for the creation of the rail regulator. The model is already there.

For running of private trains, access to tracks would be critical. Isn’t it?

What matters is access to important tracks. It is partly a transitory problem. Once the freight corridors kick off, the railways will have a lot of capacity. That is not going to happen eastwards. For the corridor to happen, I need all the land, it’s not good if I get 90%. The last time I checked, there was some land to be acquired.

You have also suggested changes in the accounting process so that it is easy to ascertain the social burden. This would mean there would be no Rail Budget. Will it happen next year?

It will be commercial accounting. First, we are talking about relationships with the Union government. I stop giving you dividends. You give me gross budgetary support, I calculate the social costs. The social costs may be forcing me to run a train in the Northeast. If it is not part of the national highway thing, then you reimburse the Union government. What we want to happen is that you give your Aadhaar number and there is a direct benefits transfer.

Where it will not work are the suburbs. There it is not that easy—state governments will take the burden. What we have not said in the report is that we could hand over the Kolkata Metro with all its assets to the state government.

Similarly, we could hand over Mumbai suburban with all its assets to the state government. We have said that in a guarded way in the report. If I decide to close down Kapurthala rail coach factory and the Punjab government gets upset, then you give the factory to the Punjab government. They will probably be happy. The same applies if I take Raebareli outside the railway system.

On integrating the Railway Budget, what we said is that the separate Railway Budget should be phased out proportionately and merged with the General Budget. One bit we have not fleshed out is on existing workers losing benefits. The one that is very difficult to quantify is the monetary value of free government passes on the railways.

Then we gave up, since it is impossible to quantify that. In the size of the Railway Budget, it does not matter. There is a huge chunk of retirements happening in the near future, anyway.

For any meaningful reform, you need to have data at one place so that it can be analysed properly. With multiple organisations within the railways, how well do they integrate data?

The problem is that the Centre for Railway Information Systems (CRIS), Indian Railway Catering and Tourism Corporation (IRCTC) and RailTel do not talk to each other. Why do you think everyone is struggling in providing wi-fi on trains. The fibre is owned by RailTel, which is sitting on it. The CRIS, on its part, will not give the data to the IRCTC.

This cannot be solved unless you have something like a chief technology officer sitting in the Rail Bhavan and reporting directly to the railway minister. We realised we cannot get data. The CRIS has got this superb data and software on ticketing for freight side and reserved passengers. They also collect very good real-time data on train positions, essentially GPS. But the CRIS is very happy giving it to private operators. Private apps on Android get data from the railways and provide information to mobile users.

The railways has a huge land bank which can be monetised. This can be utilised for augmenting revenue from other sources. How far can this help?

There is land, but it is not as much as you think. A lot of land will be required for building additional tracks in the future. There are 8,000 stations on the railway network. Of these, from a revenue point of view, there will be just about 20 stations.

The railway ministry is slated to take a final view on the recommendations of the committee after it submits its final report. Will there be any major changes?

Besides the reorganisation of the chapters, there will not be any major changes in the recommendations. However, there will be some minor tweaking wherever required.