INDIA’S Railway Minister Nitish Kumar is currently pondering the latest in a series of reports suggesting that it is high time for Indian Railways to undergo reforms to turn it into a more commercial business in an increasingly competitive world. Submitted on August 7 by Dr Rakesh Mohan, an economist appointed in December 1998 to chair a committee of 17 experts to examine railway reform, the document confirms many of the proposals put forward in an interim report (RG 3.01 p141).

Dr Mohan’s team is backing a high-growth scenario that would in theory see the 62809 km network become largely independent of state support between five and 10 years after the programme of change is implemented. A high level of annual investment is proposed, with Rs140bn to Rs150bn envisaged in 2002-06 and Rs125bn to Rs135bn from then until 2016. Initially, around one-third of the necessary funds would be generated by IR, rising to nearly half after five years. The state would provide 25% in the early years and later just 10%, with the rest borrowed on the financial markets.

Underpinning the higher capital spend would be a radical reform package to structure IR along the lines of a private company. Kumar indicated last month in a response to the Mohan report that this ’corporatisation’ programme may find favour with government, although not all the recommendations would be followed through. Fares rises suggested by Mohan would be politically unpopular, but a regulatory authority may be established to rule on fares structures. In the immediate future the report will be evaluated by a high-level committee of senior railway managers, whose response is due next month.

Kumar emphasised that Rs170bn will be made available over the next seven years under a programme authorised by Prime Minister A Vajpayee for safety improvements, including bridge repairs, track rehabilitation and improvements to signalling and rolling stock. While IR’s manufacturing units are to become more independent, there is no question of full-scale privatisation of IR. That, noted Kumar, had led to serious problems in Britain, and would not happen in India.