Debroy Panel Report
India has one of the largest railway networks in the world.
According to the International Union of Railways which compares the data across
countries, India has the 4th largest railway network in the world. The United
States has 224,792 km, China has 103,144 km, Russia has 128,000 km and India has
64,460.8. If we normalize these absolute figures by geographical area, each km
of track covers 45.74 sq. km in India. This is roughly comparable to that in the
United States, significantly lower than that in Germany, but much lower than the
figures for Russia, China or Canada. If normalization is done by population,
each km of track caters to 19,133 people in India. Close to 20000 trains are
running every day in India, two-third of them are passenger trains carrying 23
million passengers. Others are freight trains which carry 3 million tonnes of
freight per day. There are only 4 countries in the world that carry more than 1
billion tonnes of originating freight a year and these are China, Russia, the
United States and India.
Apart from a vast network Indian Railways is also very low
cost and affordable to every class of society. Indian railways have played a
very important role in development and growth of some of the industries. Role of
Indian Railways for industries is at all the stages from bringing raw material
to sending the finished product to market. Indian railways have played an
important role in development of cotton industries, jute industries and coal
industries etc. Apart from industrial development Indian railways have played an
important role in national integration. Vast network of Indian railways allows
people to move from one place to another in the country without any hindrance.
Indian railways has provided help during national calamities, IR helps in
movement of police personnel as well as the necessary material supply to remote
places as well.
According to Economic Survey 2015 there is a need for public
investment in the Railways. Economic survey says “Railways are found to focus
strong backward linkages (demand pull from other sectors) with manufacturing and
services. From the 2007-08 data, it appears that increasing the railway output
by Rs 1 would increase output in the economy by Rs 3.3. This large multiplier
has been increasing over time, and the effect is greatest on the manufacturing
sector. Investing in the IR could thus be good for ‘Make in India’…Further,
there are sectors where railway services are an input to production (forward
linkages). An Rs 1 push in railway sector will increase the output of the other
sectors by about Rs 2.5. This forward linkage has declined over time but this is
largely endogenous to capacity constraints in the railways sector which has led
to reliance on other modes of transport. Combining forward and backward linkage
effects suggests a very large multiplier (over 5) of investments in the
Indian railways have come a long way forward since the
independence. Total route km has increased to 65,806 in 2013-14 from 53,596 in
1950-51. Similarly freight carried has increased from 73 million tonnes in
1950-51 to 1.052 million tonnes in 2013-14. There is a seven fold increase in
the number of originating passengers. Originating passengers increased from
1,284 million in 1950-51 to 8,397 million in 2013-14. Despite substantial
additions to the number of trains and passengers there are still problems with
Indian Railways. They include:-
- The speed at which freight and passenger traffic has been moving in
recent years has yet to attain the pre-war level.
- Delays in trains still continue.
- Operating ratio of the trains is very high around 90 percent.
- Problems related to hygiene as well as security persist.
- Some areas are still uncovered in the Indian railways network.
In order to remove the problems in Indian railways a
committee was constituted on 22.09.2014 with a tenure of one year for
“Mobilization of resources for major Railway projects and Re-structuring of
Railways, Ministry & Railway Board” under the chairmanship of Dr. Bibek Debroy.
Committee has submitted its report on june 2015. Major recommendations of the
To enable proper decision –making, the IR needs to adopt
a commercial accrual-based double entry accounting system. This will help
determine the precise extent of subsidization.
Any increase in passenger fares should be accompanied by
better passenger services and amenities.
A Railway Infrastructure Company should be created as a
government SPV (with a possibility of disinvesting in the future) that owns
the railway infrastructure, delinked from IR.
Set up a Railway Regulatory Authority of India (RRAI)
statutorily, with an independent budget, so that it is truly independent of
the Ministry of Railways. The RRAI to have the powers and objectives of
economic regulation, including, wherever necessary, tariff regulation;
safety regulation; fair access regulation, including access to railway
infrastructure for private operators; service standard regulation; licensing
and enhancing competition; and setting technical standards. It should
possess quasijudicial powers, with appointment and removal of Members
distanced from the Ministry of Railways.
Private entry into running both freight and passenger
trains in competition with IR should be allowed and private participation in
various Railway infrastructure services and non-core activities like
production and construction, should be encouraged by the Ministry of