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Rail revamp report back on track

New Delhi, April 17: The railway ministry is likely to revisit the Rakesh Mohan committee report that recommended decentralisation of power, encouragement to private participation and eventual corporatisation of the Indian Railways.

A committee will soon be constituted by the ministry to study the report and submit its observation on the possible growth path suggested by the Rakesh Mohan committee.

The committee will consist of Railway Board members and a team of specialist in the fields of economics, transport, communications and financial institutions.

An expert group on Indian Railways constituted in 2000 under the chairmanship of Mohan had submitted a report in June 2001 titled 'Policy imperatives for reinvention and growth'.

The report had to be put on a backburner following an outcry from the employee unions and the members within the NDA government.

However, the then railway minister, Nitish Kumar, had set up an internal committee to examine the suggestions.

A senior Railway Board member said an internal committee has already undertaken a feasibility study of the report.

'It was kept in cold storage since there was a strong opposition to it within the government. The business and political environment, too, was not conducive for such a reform-oriented action. Now, perhaps, the government feels that it can be examined,' sources in the Railway Board said.

The report had recommended a phased corporatisation and revamp of railways' financial management.

'The underlying design principle is to create outward-looking business-oriented, customer-driven institutions. This will involve reorganisation of the core transportation network into key components ' freight, passenger, suburban fixed and shared infrastructure,' the report states.

'These business units would operate with a large degree of autonomy, yet be held accountable for a balanced score-card of commercial performance measures. Desegregation in such businesses is the first step towards commercialisation,' it adds.

It also suggested that in order to provide adequate focus on the core business as well as improve flexibility and cost competitiveness, the non-core activities of the railways should be fully divested.

Railway ministry sources said, 'The process (corporatisation) needs a political will and a commitment to improve the functioning of railways. It can be done in phases. Worldwide it has taken a minimum of 10 years and need not be done in one go. But it has to start now.'

The Rakesh Mohan committee had warned that over the years, the railways would not be able to generate the kind of internal resources needed to give market rate of returns on additional debt and fresh preference capital. These are 6 per cent and 1 per cent, after adjusting for inflation.

'To put it bluntly, the low-growh business will drive Indian Railways to a fatal bankruptcy. In 16 years, the government will be saddled with an additional financial liability of more than Rs 61,000 crore,' the report said.

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