The Railways needs new policy signals

The Hindu Business Line, May 15, 2015

By Pradeep S Mehta

The Debroy panel makes some noteworthy suggestions. A regulator accountable to Parliament is a desirable step

India has adopted the mixed economy approach as a mantra. The same applies to the Bibek Debroy Panel’s treatment of private participation in the Railways. It does not recommend privatisation of the Railways anywhere in its report. There has been much noise over whether the report recommends privatisation, which the minister Suresh Prabhu has contested.

India liberalised the airline sector but did not wind up the haemorrhaging Air India. However, the panel report does deal with stemming blood flows in the Railways in various ways.

The draft report is well done and can change the face of the Railways if the recommendations are implemented in a defined time frame.

Needless furore

It is not that private participation is foreign to Railways. Container freight operations have been opened up to private participation. Some passenger trains too are being run by private parties, such as the Palace on Wheels.

The hullaballoo over privatisation is akin to the response to the National Transport Policy Development Committee, headed by Rakesh Mohan, which called for an integrated transport ministry.

It is possible and advisable to allow private operators to run trains in competition with other operators, including the Railways, while the track remains exclusively the Railways’ property, as is the case in various advanced countries.

But they follow competitive neutrality as a core principle — not favouring their trains over private trains. Alas, lack of neutrality is practiced even today in the deregulated container freight business in the Railways.

The Debroy Panel report has clinically analysed all the past committee reports, including the Rakesh Mohan panel’s. Actions taken or not, and why, also feature in this excellent draft report. It is often so difficult to get old reports in our government’s labyrinthine system, established before the internet/website age.

New committees have to reinvent the wheel all the time. My own experience while steering a Planning Commission working group to improve the business regulatory framework showed that none from the Commission or the relevant ministries were aware of the work already done. So we were forced to start from a poor baseline.

Surprisingly, the Debroy Panel has not commented on the earlier recommendation of creating a composite transport ministry. One can imagine that the Railways would not have suggested harakiri.

However, Debroy who is now a member of NITI Aayog, should rise above partisan interests. The idea is in sync with the Modi government mantra of ‘minimum government, maximum governance’. There is one minister for power, coal and renewable energy, even though separate departments exist. Such an arrangement helps to create better policy coherence. Read More >>

The writer is Secretary General of CUTS International.

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