A framework for the IRC

THE RAKESH Mohan Committee for the framework of a restructured railways envisages a corporate entity, an executive board. It also calls for abolishing the Railway Budget. The following is the committee's observation on the proposed structure:

``The Indian Railways Corporation (IRC) will be responsible for managing railway assets and resources to best meet the objectives of the owner. Its main characteristics are:

It will be an independent, corporatised, customer focused and financially viable railway, run along commercial principles and subject to generally accepted corporate accounting principles and reporting.

The Indian Railway Executive Board (IERB) will manage the IRC and be responsible for the restructuring process.

It will focus on core activities such as provision of infrastructure and the operation of freight and passenger services. To provide adequate focus on the core business as well as improve flexibility and cost competitiveness, the non-core activities of the railways would be fully divested over time, say five years.

It will combine a central organisation with a regional decentralised structure. In that context, passenger, freight and suburban will function as profit centres and infrastructure and service as cost centres.Actual corporatisation is expected to take three to five years. Recasting of accounts, setting up of the Indian Rail Regulatory Authority (which will regulate the system setting rules, providing frameworks and upholding supervisory responsibilities), and restructuring of business units, will have to precede corporatisation.

The role of the IREB will comprise a diverse cross section of talent including appropriately qualified members of the private sector business community.

The next critical step is to initiate the redesign of the legal framework. A key milestone of great symbolic value is abolishing the Railway Budget.

If action on legal framework and corporatisation is initiated immediately, the Railway Budget can be abolished by 2002. This will be a potent symbol of the changing reality and will help set the stage for creating a modern rail system to meet the needs of a modern India.

- VSS

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