Bibek Debroy Committee On Railway Restructuring

Bibek Debroy Committee on Railway
Restructuring
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Railway Restructuring
Editorial Team
13 Jun, 2015
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Committees / Commissions, Economy, National,
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A committee headed by Bibek Debroy, vice-chairman of National Institution for

Transforming India (NITI) Aayog, presented its final report to the Rail Ministry on 12
June 2015. The Debroy Committee was constituted in September 2014 by Prime
Minister Narendra Modi with the objective of recommending ways to restructure the
railways and make the resources at its disposal more valuable. The final report of the
committee has recommended some radical measures to improve the railways.
Following are the important recommendations of the Bibek Debroy Committee –
1. Passenger Operations
The committee has recommended the entry of private players to run passenger trains.
However, that doesn’t mean that they will also manage the tracks. The track management will
be taken care of by a separate company working under the railways’ ministry’s fold. But the
railways will have to handle private trains competing among themselves, and also with its
own trains, to attract passengers. While there was talk of private sector role in freight, this is
the first time a move is being made to bring it in the running of passenger trains. Apart from
this the committee has also supported the entry of private companies in operation and
maintenance of railways.
2. Independent Regulator
The committee recommended the setting up of a Railway Regulatory Authority of India
(RRAI) with a separate budget and independent of the railway ministry. The regulator, as
envisioned by the committee, would be independent of the rail ministry and have quasi-
judicial powers with the function of tariff regulation, safety regulation, fair access regulation,
service standard regulation and licensing and setting technical standards.
3. Railway Budget
The panel has also suggested the scrapping of a separate railway budget. The committee felt
that Railways was just another public sector company. The concept of separate railway
budget is seen as British colonial legacy which has lingered on for decades. This would also
that by not having separate budget it would be easier to segregate the railways’ social
responsibility (subsidizing passenger fares) from its operational finances. This would, in
effect, result in the central government showing the subsidies on railway fares in the general
budget – and the state governments will have to bear their part for sub-urban trains.
4. Employing Commercial accounting techniques
An important recommendation has been given with regard to switching over to commercial
accounting of railway functions, corporatization of railways production units and involving
private sector in manufacturing coaches, wagons and locomotives. It is worth mentioning that
till now the railway had focussed on expenditure accounting to gauge operational efficiency.
5. Non-core operations
The committee has backed the idea of separating the Railways’ unremunerative activities,
such as running schools, hospital, stadia, catering, real estate development and its huge
security set up, RPF, from the core business of the railways. The railways run some of the
biggest hospitals and schools across the country.
6. Organisational Structure
Commenting on the organizational structure of the railways, the committee has said that it has
become an overly centralized and hierarchical organization. Its departments worked in
separate silos and that has adversely affected the work culture. The panel suggested rewriting
of some of its staffing rules in order to attract outside talent and restructure the house along
business units for ushering in efficiency. The committee noted that the silo structures of the
eight Group – A services within railways has led to departmentalism which has snapped the
spirit of team work. He has suggested two feasible options for addressing the issue:
amalgamation of all existing services into a single unified Railways Service or merging the
eight services into two separate services – Indian railways Technical Service and Indian
Railways Logistics Service. The committee has recommended the second option.
7. Private participation
The committee stressed that it was not recommending privatization (in the sense of sale of
equity) of the railways. The committee noted that private sector participation in railways has
been muted when compared to other sectors such as ports, telecom, airports and roads. It
found that one of the main reasons was that the same organization dealt with the three prime
functions – policy making, regulatory functions and operation.
8. Speedy Completion of Projects
For speedier execution of projects and to cut time and cost run, the committee suggested that
construction organizations working at zonal railways must be brought under the umbrella of
one or more PSUs such as RVNL, IRCON etc. It has also strongly recommended
decentralisation of decision-making to empower divisional and zonal railway managers.
What is the attitude of Railway Unions towards the Report of Debroy Committee?
Bibek Debroy committee’s recommendation to allow private players in Railways has met
with strong opposition from employees’ union. The All India Railway Federation on 12 June
announced its decision to observe black day on 30 June 2015 all over the country by wearing
black badges. On its part, the committee observed that said it is not recommending
privatisation of Railways by means of sale of equity but endorses private entry with the
provision of an independent regulator.
Full name of the Committee

Committee for Mobilization of Resources for Major Railway Projects and Restructuring of
Railway Ministry and Railway Board
Chairman of the Committee : Bibek Debroy (Vice-Chairman, NITI Aayog)
Other 7 members of the Committee:
K M Chandrasekhar (Former Cabinet Secretary)
Ravi Narain (Former MD National Stock Exchange)
Gurcharan Das (Former CMD Proctor and Gamble)
R. Kashyap (Former Financial Commissioner, Railways)
Partha Mukhopadhyay (Senior Fellow, Centre for Policy research)
Ajay Tyagi (Additional Secretary, Department of Economic Affairs)
Ajay Narayan Jha (Additional Secretary, Department of Expenditure)

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A committee headed by Bibek Debroy, vice-chairman of National Institution for

Full name of the Committee

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