Under the chairmanship D K Mittal, former secretary, financial services, Railway Ministry has set up a committee in order to examine the existing revenue structure and come up with some suggestions for raising earnings of Indian Railways.
About the Mittal Committee
A 9 member committee on December 4th, 2014 was formed under the chairmanship of former Secretary for financial services, D. K. Mittal. The committee was meant to examine the current revenue structure and recommend 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. Other members on the panel were from Boston Consulting Group and McKinsey. The Committee was given a timeline of 18 days for submitting its recommendations and thus it was to submit report by 21st December 2014. This is the third expert panel on railways being set up after the NDA government assumed charge in the year 2014. These three Committees are as follows:
1. Debroy Committee, which was announced to suggest restructuring in the Railway Board.
2. The Sreedharan Committee, being formed to recommend changes in tendering process.
3. The D K Mittal Committee, formed to suggest ways and means to raise the revenue of Indian Railways.
The report is crucial for railways as its recommendations is expected to help the ailing national transporter to take certain concrete measures which would be presented to Parliament in the Rail Budget for 2015-16 in February.
Focus of study
The committee is expected to focus on studying the efficacy and sufficiency of the existing revenue structure and avenues for raising revenues besides identifying leakages of revenue. On the expenditure side, the committee was expected to suggest measures for reduction in spending.
In a way the recommendations of this committee will help Government to take certain concrete measures which will be presented to Parliament in the Railway Budget for 2015-16 in the month of February.
Recommendations of the Report
There were many recommendations in the report of D K Mittal Committee. Among those reports, the prime in nature were as follows:
It emphasized on the Indian Railways to raise its fares on a regular basis for the next few years so that they may come at par with the road sector and link fare hike with the quarterly CPI or Consumer Price Index data of the Reserve Bank of India.
The committee also raised a strong case for increasing highly subsidized and loss making suburban sector second class train fares. The Recommendation of Mittal Committee, fares has 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 other such details. The Mittal Committee also recommends the Holiday special trains to be run on premium tariffs.
The Mittal Committee 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. According to the Mittal Committee, Train fares in India are lower than fares of public transport in the road sector and thus parity between the two is going to be looked at for in the coming 5 years. At the present scenario, train fares are around 30% to 60% 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.
The D. K. Mittal Committee was formed to suggest ways to increase the revenue of the Indian Railways, submitted its report to Rail Minister Suresh Prabhu. With the recommendations of this report, it is expected that help the ailing transport sector revive; concrete measures will now be available for the rail authorities to ensure that the 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.