In News:

The Railways (Amendment) Bill, 2024 was passed in the Lok Sabha on December 20, 2024, aiming to enhance the functioning and autonomy of Indian Railways.

Key Provisions:

• Repeal of the Indian Railway Board Act, 1905: The Bill repeals the 1905 Act and incorporates its provisions into the Railways Act, 1989, simplifying the legal framework by reducing the need to refer to two separate laws.
• Statutory Backing for Railway Board: The Bill provides statutory backing to the Railway Board, which previously lacked such a legal mandate. It grants the Union government the authority to determine the number of members, their qualifications, terms, and conditions of service.
• Decentralization of Power: The Bill aims to decentralize decision-making, granting greater autonomy to regional railway zones. This shift will allow more independence in budgeting, infrastructure projects, and recruitment, addressing long-standing calls for improved regional empowerment.
• Independent Regulator: The Bill proposes the creation of an independent regulator for overseeing tariffs, safety, and private sector participation. This idea has been supported by previous expert committees to encourage greater competition and transparency in the sector.
• Fast-Tracking Infrastructure and Services: The Bill will streamline approvals for new train services and infrastructure projects, helping meet demands from underserved regions, particularly in states like Bihar.

Objectives:

• Modernization of the Legal Framework: By incorporating the provisions of the 1905 Act into the 1989 Act, the Bill aims to simplify and modernize the legal architecture governing the railways.
• Empowerment of Railway Zones: Autonomy for railway zones is seen as a key step towards improving efficiency and accountability in operations.
• Private Sector Participation: The establishment of an independent regulator is expected to promote private participation in the railway sector, aligning with international standards.

Historical Context:

• The Indian Railways Act, 1890 established the foundations for Indian Railways as a government entity, which was further refined with the Indian Railway Board Act, 1905.
• This Bill aligns with recommendations from previous committees, including the Sreedharan Committee (2014) and the Committee on Restructuring Railways (2015), which have called for greater decentralization and autonomy for railway zones, as well as an independent regulatory body.

Challenges and Proposed Reforms:

• Financial Sustainability: The railways face challenges such as high operating costs, particularly from salaries and pensions, and losses in the passenger segment. Suggestions to improve finances include rationalizing passenger fares, enhancing freight revenue, and attracting private investment in infrastructure.
• Efficient Freight Operations: The Bill also addresses concerns about network congestion, especially for freight operations, and aims to increase the competitiveness of freight transport by improving infrastructure and reducing cross-subsidies from passenger fares.

Recommendations of various Committees on reforming the Railways

Regulatory Structure for Railway Sector

• Set up independent regulator to fix tariffs, promote competition, and protect consumer interests

Organisational structure of Indian Railways

• Corporatisation of Indian Railways
• Reorganise Railway Board to reflect a corporate business structure
• Envision the Railway Board as a policymaker alone
• Provide zones with full financial autonomy

Operations

• Separate core and non-core business (hospitals, schools, catering and security) of the Railways
• Permit private participation in some railway operations

Finances 

• Clearly define social obligations and commercial business roles
• Restructure accounting procedure to reflect zone and route-wise profit and loss statements6,7,9
• Develop PPP models to attract private participation in: (i) developing and maintaining stations/ terminals, (ii) leasing of wagons, (iii) freight train operations, (iv) manufacturing of rolling stock, and (v) running non-core business operations
• Monetise railway assets
• Rationalise passenger tariffs

Regulatory Structure for Railway Sector

• Set up independent regulator to fix tariffs, promote competition, and protect consumer interests

Organisational structure of Indian Railways

• Corporatisation of Indian Railways
• Reorganise Railway Board to reflect a corporate business structure
• Envision the Railway Board as a policymaker alone
• Provide zones with full financial autonomy

Operations

• Separate core and non-core business (hospitals, schools, catering and security) of the Railways
• Permit private participation in some railway operations

Finances 

• Clearly define social obligations and commercial business roles
• Restructure accounting procedure to reflect zone and route-wise profit and loss statements6,7,9
• Develop PPP models to attract private participation in: (i) developing and maintaining stations/ terminals, (ii) leasing of wagons, (iii) freight train operations, (iv) manufacturing of rolling stock, and (v) running non-core business operations
• Monetise railway assets
• Rationalise passenger tariffs