The rigid organisational structure of the Railway Board is preventing it from raising the resources needed to modernise and expand the Railways, says a committee headed by Deepak S. Parekh, Chairman, HDFC.
Being the Board of a monopoly, it has stalled several basic reforms, including private participation and commercial accounting, said the interim report of the High Level Committee on Financing Infrastructure of the Planning Commission.
The Centre set up the committee to recommend policy initiatives that would enable the investment flows in infrastructure during the 12th Plan.
The committee, which had members representing the government, banking, insurance and infrastructure sectors, has recommended restructuring of the Railway Board on commercial lines to enable investments and growth in the organisation, which otherwise seems stagnant.
‘It [the Railways] has also been unable to attract private investment, which constitutes less than 5 per cent of its total investment. For want of investment, the Railways will continue to deteriorate.”
Archaic form
The restructuring and modernisation have brought welcome changes in several sectors. However, the organisational structure of the board has retained its archaic form, which is not conducive to efficient commercial operations [of the Railways].
The Railways is facing serious problems such as inadequate investment, diminishing efficiency, falling safety standards and declining share in freight and passenger traffic. Some urgent measures are necessary for a turnaround of the Railways, says the report.
The committee recommended rationalising the prevailing uneconomic rail fares, which have not been revised for a decade. This will augment internal resource generation necessary to make investments to modernise and expand the railway sector.
The total investment for the Railways is projected at Rs 4.56 lakh crore during the 12th Plan compared with Rs 2.31 lakh crore during the 11th Plan. Contributing to about 83 per cent of the total investment, the public sector investment is projected at Rs 3.76 lakh crore while the private investment is at Rs 79,797 crore during the 12th Plan.
Private investment
The substantial increase in private investment is driven by the expected private participation in high speed corridors, redevelopment of stations, private freight terminals, port and other connectivity projects and dedicated freight corridor project.
The committee recommended the use of public-private-partnership initiatives to mobilise large volumes of investment in the Railways. These include modernisation of railway stations; elevated suburban corridors in Mumbai; development of new freight corridors; high speed rail projects and manufacturing of diesel and electric engines, coaches and wagons.