The committee headed by Niti Aayog member Bibek Debroy has recommended a whole set of reforms, including entry of private players into railways, separation of off line activities from core business, passing on subsidies to the Centre and an end to the practice of a separate budget.  The committee says that there is a need for not only to improve the internal resource generation and explore methods of financing, but also to improve utilisation of available resources.

"It does, however, endorse private entry, which is not ab initio, but ab hinc -- as this is already part of the Indian Railway policy with the proviso of an independent regulator. This committee prefers the use of the word liberalisation and not privatisation or deregulation, as both the latter are apt to misinterpretation," it said.

The committee has given its recommendation on various aspects such as, separation of activities like running of hospitals, schools, catering, real estate development, manufacturing of locomotives, coaches and wagons from the core business of running trains. It recommended that the state governments should be asked to fund the Government Railway Police (GRP) and the general managers should have the freedom to choose between private security guards and RPF for security on trains.

The committee has envisaged three points of view that existing production units has to be exposed to competition from private sector and for facing the competition these units will be placed under a special purpose vehicle known as the Indian Railways Manufacturing Company. Once the changes of the first five years are implemented, including the resolution of the social cost issue, the Railway Budget should be phased out with gross budgetary support to Indian Railways from the Union Budget.

The committee recommends in its report that, Investment is a function of railway finances, that will improve only when the practice of freight and upper-class passenger fares subsidising lower class fares, ends. The panel bats for an independent regulator to ensure fair and open access and set access charges on the rail track.

By Premji