Elevation of MDs at other units expected to help Board members concentrate on policy making

A move to vest more powers in the chiefs of Railway subsidiary companies has hit a hurdle with the Railway Board refusing to delegate more powers to the top brass of two public sector units under its wing.

While the Board will soon give the managing directors of some units under its watch the additional responsibility of chairman, it is unwilling to do so in the case of the Dedicated Freight Corridor Corporation of India and Indian Railway Finance Corporation.

A the proposal stands right now, only the managing directors of Container Corporation of India, Ircon International, Indian Railway Catering and Tourism Corporation, Railtel, Rail Vikas Nigam Ltd, RITES, Konkan Railway Corporation and Mumbai Rail Vikas Nigam Corporation (MRVC) are likely to be re-designated. In fact, when the Managing Directors of these entities were recently called for discussions on their re-designation and new responsibilities , the Managing Director of the Dedicated Freight Corridor Corp was not a part of it, sources said.

Key idea

First, some background on the development is in order.

The move to delegate more powers to the Managing Directors of the Railway public sector units was taken after much deliberation among officials of the Department of Public Enterprises, Public Enterprises Selection Board, the Railway Ministry and the Prime Minister’s Office, multiple sources told Business Line. The then Railway Minister, Mr Dinesh Trivedi, had also approved the proposal.

The idea was to ensure faster decision making in the units and unshackle the Managing Directors, leaving the Railway Board Members (who act as chairmen of these units) to monitor the performance of these units on a need-to-know basis, or once every six months.

Since the Railway Board is the policy making body of the Indian Railways, the move would have ensured that its Members would have more time to fine-tune pending policies rather than be involved in the day-to-day affairs of the public sector companies under their watch.

Moreover, the move would also have opened up opportunities for the units. For instance, Concor, a listed subsidiary could easily have become a Navaratna company (the only reason why its proposal to be one was turned down five years ago was because of the Ministry’s unwillingness to let go of the Board member’s key role as chairman of the company.

Mixed view

There are mixed views on why the Ministry changed its stance on these two public sector entities alone.

Many in the Ministry feel that the Dedicated Freight Corridor is too big a project to be delegated to a CMD and that the Railway Board’s involvement would be crucial and needed more often than not.

Yet, the same argument is turned upside down by critics who are clearly unhappy with the Ministry’s unwillingness to let go. “If the smaller public sector units can’t be handled by ‘part-time’ chairmen of the administrative Ministry, how can the largest project be handled by such a ‘part time’ Chairman,” they counter.

Even in the case of IRFC, the same argument holds, although there are some who point out that retaining the Finance Commissioner as the Chairman of IRFC would ensure that the Railway Ministry does not divert market borrowings into unremunerative railway projects.

Given that the Railways is always short of funds, the IRFC has had to ward off many pressures to limit its investment only to rolling stock such as engines, wagons and coaches, which get them assured and quicker returns on investment. In fact, last year, the Railway Finance Commissioner had reversed a decision by her predecessor to divert IRFC funds to rail project finance.

The Railway Ministry did not respond to queries sent by Business Line on the issue.


(This article was published on July 31, 2012)
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