D. K. Mittal Committee Charts a New Route for Indian Railways

D. K. Mittal Committee Charts a New Route for Indian Railways

The D. K. Mittal Committee formed to suggest ways to increase the revenue of the Indian Railways, submitted its report to Rail Minister Suresh Prabhu. With the recommendations of the report expected to help the ailing transport sector revive, concrete measures are now available for the rail authorities to ensure Indian Railways becomes an engine of growth. The Rail Budget for 2015-2016 will be presented to the Parliament in the month of February. Steps will have to be taken for the rail services in India to improve and the recommendations of the report could well be the first stop in a long journey towards positive transformation for this sector.

About the Mittal Committee

The Railway Minister set up a 9 member committee on December 4th, 2014 under the chairmanship of former Secretary for financial services, D. K. Mittal. The committee was for examining the current revenue structure and recommending ways to engage in fund raising for a public sector undertaking.

The members of the committee included Chairman and MD of Rail PSUs namely RITES, Ircon, Concor and Railway Land Development Authority. There were 2 other members on the panel from BCG (Boston Consulting Group) and McKinsey.

About the Report

The Committee in the report has given a detailed study regarding the efficiency and sufficiency of the existing revenue structure and avenues for growth besides finding out the leakages, as per media reports. The report has also suggested methods to reduce spending for the ailing PSU.

"The report was submitted today and now all its recommendations would be examined in details by the concerned officials before initiating action on it," a senior Railway Ministry official was quoted as saying.

Recommendations of the Report

The Indian Railways needs to raise its fares on a regular basis for the next few years to be at part with the road sector and link fare hike with the quarterly CPI or Consumer Price Index data of the Reserve Bank of India, according to the Mittal Committee.

The committee also raised a strong case for increasing highly subsidised and loss making suburban sector second class train fares. Fares have been increased by 2 paise per km every two months till they break even. A high level committee has been set up for increasing revenue and initiating financial reform in the Railways. The report has also recommended “flexi fares” in line with airlines and greater choice to passengers for seat selection and such like. Holiday special trains should be run on premium tariffs, the Committee has also recommended.

The report has also recommended the establishment of a Rail Tariff Committee and also recommended railways increase minimum chargeable distance to 20 km for suburban trains and 100 km for mail and express trains. Train fares in India are lower than fares of public transport in the road sector and parity between the two is going to be looked at for in the coming 5 years. Currently, train fares are between 30 to 60 percent of fares in the road sector. Train fares should be associated with 25% of the CPI data released by the RBI every 4 months, according to the report. With increase in fares, passenger traffic still equals 65% of the movement and 26% of the earnings.