Railways have been crucial arteries of the country. They serve in both trade and transit of goods and people. Decades of neglect has had its effect on railways and hence the performance of the same. The call for a railway regulator is long drawn.
Recent reforms in Railways:
Merging of railway Budget with general budget
Creating a Railway Safety Fund called Rail Sanrankshan Kosh.
The Bibek Debroy Committee found the private sector is discouraged from participating more effectively due to a monopolistic framework
Coming up with a system that de-risks private investment and creates a level playing field are among the major challenges before the Rail Development Authority
Creating a Rail Development Authority for India is among the most significant reforms to an infrastructure system undertaken by the government.
The railways connect the country’s far corners and act as a driver of the economy.
High rates of economic growth have raised the demand for travel, but this remains largely unmet.
The popular aspiration is for a modern system that offers high-quality travel with low risk of accidents, while industry wants smooth freight transfer.
Case for an independent Regulator:
An independent, empowered regulator could be the paradigm shift that is needed.
The proposed Authority would have to ensure that the resources of the system are optimally utilized.
As the National Transport Development Policy Committee noted in 2014, the centralisation of all functions in the Railway Board has proved detrimental to the organisation’s growth, particularly at a time when there is a need for massive investment in infrastructure for 7%-plus GDP growth.
Conversely, robust economic expansion further raises the demand for railway services.
To reconcile this, the regulator has to identify sectors that can support higher tariffs and also produce greater volumes of traffic.
Such accurate interventions are critical if the trend of declining rates of growth in railway freight revenues and volumes, which set in during 2011-12, is to be reversed.
Challenges w.r.t. Railways:
One of the big challenges before the Centre is to facilitate higher non-budgetary investment in the railways.
Coming up with a system that de-risks private investment and creates a level playing field are among the major challenges before the Rail Development Authority.
In the area of passenger services, this offers several possibilities; the railways cater to some 23 million passengers a day in a network of about 8,000 stations.
The experience of consumers in cities shows that use of information technology to deliver traditional services can lead to higher levels of efficiency and lower costs, besides adding jobs.
While regulation of tariffs matching the quality of travel can help raise revenues, the system should be able to move both people and freight faster in order to grow. Inducting faster, more comfortable trains on 500 km-plus inter-city routes would attract new traffic, and help operate cheaper passenger trains to interior areas, as part of the government’s social obligation.
Technology upgrades are essential to raise carrying capacity, service frequency and speeds.
Rail reform is complex. It was undertaken in Europe during the 1990s, separating infrastructure from operations. Reforms w.r.t. railway sector has highest spillover effects on all sectors of the economy. Hence the concept of an independent regulator is timely and most necessary but should be truly independent and autonomous.
Connecting the dots:
Elaborate on the reforms initiated in railways and the spillover effects the same can have on other sectors of the economy.