Reform first, privatise later: Bibek Debroy to railways

“There is a need for rationalisation of passenger trains”

GN Bureau | March 24, 2017


#Indian Railways   #Reforms   #Governance   #Event Report   #Railways   #Bibek Debroy   #Rail Reforms  
Bibek Debroy
Bibek Debroy

Before privatisation and corporatisation, the Indian Railways need to undertake major reforms including commercial accounting, decentralisation and human resource among others, said Bibek Debroy, economist and member, NITI Aayog at Railways Reforms and Governance Conclave organised by Governance Now on Friday.

Stressing the importance of introducing commercial accounting, he said, “I need commercial accounting not only to attract private sector investment but also because I need to know the kind of return public investment will have.”

In the present system – because of the complicated system of accounting – it’s difficult to ascertain the average rate of return on a typical railways project, he said. In some cases it might be even negative, he added.

“Whether I get access to funds using the World Bank window or some other, those are loans. They have to be repaid, perhaps at an average rate of seven percent. So if I don’t know the rate of return, I will not be in the position to pay back the loan,” he said. The commercial accounting is already being done on a pilot basis in Ajmer and northern zone. 

“There is no particular reason why the transition to commercial accounting will not be possible by 2019. It is only a tool, after that one will require MIS which will take few more years,” he said.

Cautioning about the greater demand for public private participation (PPP), Debroy said, “Most services are already privatised. If we are not talking about services and moving away to something else, or are we talking about management which is also PPP or public assets or are we talking building of assets using the private sector?”

“Remember, the cost of capital obtained by the private sector tends to be higher than that obtained by the public sector. Remember that most of our infrastructure is funded by the debt route; that business cycles have their ups and downs and that banks are incapable of lending money for 20-25 years projects. In that scenario, all private sector calculation goes haywire", he said.

On redevelopment of 400 stations, he said, “I don’t think more than 20 stations have the potential land to be exploited by real estate redevelopment. We may see six to seven stations by 2019 including Surat, Chandigarh, Shivajinagar and Brijwasan.”

He said that there is also a need for rationalisation of passenger trains. “Why should we run slow passenger trains between Delhi and Tundla. It is well connected already.” 

Further, Debroy said that railways is going to set up a regulator.

The decentralisation of decision making is another major exercise underway in the railways. Historically the zones have been functioning in a decentralised manner. Over a period of time, however, Rail Bhawan has become extremely centralised in its decision making, he said.
Even as railways has 1.3 million employees, it has shortage in the core business of running trains, he said.

 

Comments

 

Other News

How Covid-19 can be a boon to slash tobacco disease burden

 The two-month Covid-19 lockdown has been both a bane and a boon for India’s 27 crore tobacco users. With tobacco not included in the list of essential goods and many states explicitly banning chewing tobacco over concerns of spitting, the sharp drop in availability has forced them to undergo wi

Maharshtra braces to face Cyclone Nisarga

 Even as Mumbai fights challenges posed by COVID-19 on multiple fronts and as the  coronavirus cases continue to rise daily, the city now faces a double whammy with the cyclone ‘Nisarga’ slated to make the landfall in Maharashtra Wednesday. A state-wide alert has been issued for Mumba

Harnessing the demographic capital: how effective are skilling programmes?

Probing data concerning increased job creation and the decline in unemployment has been holding the attention of economists and been subject of discussions in several think tanks in the preceding months. The NITI Aayog reports that 3.53 million new jobs were created between September 2017 and February 2018

It`s time to Unlock now, with economic focus

With Lockdown 4 ending Sunday, the home ministry has issued new guidelines to fight COVID-19 and for phased re-opening of areas outside the Containment Zones. The guidelines, issued based on extensive consultations held with states and UTs, will be effective from June 1 till June 30. The first phase of reo

Small kitchen gardens turn saviours for Gujarat tribal families

When the whole world is fighting COVID-19, food and nutrition security has become a major issue. The pandemic has aggravated the existing food crisis in India, especially in rural and tribal regions. There has been less availability of fresh foods in most parts of the country, and the tribal community has

India will set example of post-Covid-19 economic revival: Modi

India is determined to “set an example” for the rest of the word in the post-pandemic economic revival, prime minister Narendra Modi has said, underling the need to become self-reliant. “There is also a widespread debate on how the economies of various countries, including



Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter