The Railways (Amendment) Bill, 2024, has been recently passed in the Lok Sabha. It aims to establish a unified and streamlined legal framework for Indian Railways by repealing the Indian Railway Board Act, 1905, and incorporating its provisions into the Railways Act, 1989. This initiative simplifies the legal structure governing Indian Railways while addressing emerging challenges in governance, financial sustainability, and modernization. Railways (Amendment) Bill 2024
Source- Invest India
Timeline of Indian Railways governance milestones
The construction of India’s railway network began as a branch of the Public Works Department before Independence. Over time, the need for a structured framework led to the enactment of various railway governance laws, as outlined below:
| 1890 | The Indian Railways Act of 1890 was introduced to regulate railway operations effectively, marking the formal legal framework for railways. |
| 1905 | a. The Indian Railway Board Act of 1905 was enacted, establishing the Railway Board and granting it specific powers and functions under the Indian Railways Act, 1890. b. The railway organization was also separated from the Public Works Department. |
| 1989 | The Indian Railways Act of 1890 was replaced by the Railways Act of 1989, modernizing railway operations. However, the Railway Board Act of 1905 remained in force, and the Chairman and Board members continued to be appointed under its provisions. |
What are the objectives and key features of the Railways (Amendment) Bill, 2024?
Key Objectives of the bill:
Statutory Backing to the Railway Board: The Bill proposes to amend the Railways Act, 1989, to provide statutory backing to the Railway Board, which has operated without such authorization since its inception.
Simplification of Legal Framework: By integrating provisions of the 1905 Act into the 1989 Act, the Bill eliminates legislative redundancy and ensures a consolidated legal structure.
Key Features of the bill:
1. Constitution of the Railway Board– It authorizes the Central Government to decide the number of Board members, as well as their qualifications, experience, and terms and conditions of service. It also defines the manner of appointment for the Chairman and Board members.
2. Infrastructure upgrades– It Introduces provisions for expedited development of superfast trains and enhanced infrastructure, such as extending critical routes like the Arunachal Express, with significant investment.
3. Independent Regulator- The Bill proposes to establish an independent regulator to oversee tariffs, safety, and the participation of the private sector in the Railways.
4. Decentralization and Autonomy– The Bill also proposes to improve operational efficiencies and decentralise powers, granting greater autonomy to Railway Zones.
Note– However, the bill retains the current organisational structure of the Indian Railways.
Source- Indian Railways
Why was the amendment needed?
1. High operating costs– A significant portion of the budget is allocated to salaries and pensions which leaves limited resources for infrastructure development.
2. Passenger business losses– Cross-subsidization of passenger services by freight revenues has resulted in financial strain. Underpriced tickets have contributed to continued losses.
3. Under-investment in capacity augmentation– Limited private participation and poor surplus generation have constrained infrastructure expansion and modernization.
4. Network congestion- A congested network reduces freight competitiveness, further impacting revenues.
5. Lack of a unified framework– The coexistence of the Indian Railway Board Act, 1905, and the Railways Act, 1989, led to legislative complexity and inefficiency in governance.
Recommendations for Change:
The Bill aligns with proposals by various committees, including:
| The Sreedharan Committee (2014) | Suggested granting autonomy to railway zones and restructuring the Railway Board. |
| 2015 Expert committee on Railway Reforms (Bibek Debroy Commitee) | a. A major recommendation was to set up an independent regulatory body to ensure fair competition and regulate pricing. b.The committee also recommended ‘liberalization‘, allowing private operators to participate in rail services to increase competitiveness and improve services. |
What is the significance of the bill?
1. Legal simplification– This bill integrates the provisions of the 1905 Act into the 1989 Act, which reduces the redundancy and creates a cohesive legal framework.
2. Improved governance– It empowers the central government to define qualifications and terms for the Railway Board. It ensures merit-based appointments and better leadership.
3. Enhanced efficiency– It decentralizes decision-making to railway zones which enables faster project implementation, improved resource utilization, and better service delivery.
4. Private sector participation– The establishment of an independent regulator ensures a level playing field for private players, attracting investments in railway infrastructure.
5. Alignment with development goals– A modernized railway system supports India’s broader economic and infrastructure objectives by improving connectivity and reducing logistics costs.
What are the concerns regarding the amendments in the Bill?
1. Privatization fears– Opposition parties, particularly Congress, have argued that the Bill could pave the way for privatizing Indian Railways, undermining its accessibility for the poor and vulnerable sections of society.
2. Impact on autonomy– Critics fear that increased government control over Board appointments may erode the autonomy of Indian Railways, potentially leading to politicization of key decisions.
3. Passenger welfare– The discontinuation of fare concessions for senior citizens, journalists, and economically weaker sections during the pandemic has drawn criticism. Several MPs have demanded their restoration to uphold Railways’ social responsibility.
4. Lack of clarity on regulator– While the Bill proposes an independent regulator, details on its composition, functions, and operational framework remain vague.
5. Regional Inequalities– There are concerns that prioritizing certain regions for infrastructure upgrades may lead to uneven development across the country.
Way Forward and Solutions
The Railways (Amendment) Bill, 2024, is a commendable effort to modernize the governance framework of Indian Railways. However, its success depends on addressing key challenges and ensuring balanced implementation:
1. Safeguarding public interest– Any move toward private sector participation must prioritize affordability, accessibility, and public welfare. Safeguards should be in place to prevent exploitation or over-commercialization.
2. Transparency in appointments– A transparent and merit-based process for appointing Railway Board members is essential to ensure accountability and maintain autonomy.
3. Strengthening the regulator– Clearly defining the role, powers, and structure of the independent regulator will build investor confidence and ensure fair practices.
4. Decentralization with oversight– While granting autonomy to railway zones, mechanisms for effective oversight and accountability must be established to prevent inefficiencies.
5. Focus on financial sustainability– Innovative measures to increase revenue, reduce operational costs, and attract private investment without compromising public welfare are crucial for long-term sustainability.
6. Balanced regional development– Infrastructure projects should be planned to ensure equitable development across all regions, addressing disparities and fostering national integration.
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