Railways refers IRCTC, RailTel merger to DIPAM | So Good News

The Department of Investment and Public Asset Management (DIPAM) will now take a call on the merger of RailTel Corporation of India (RailTel) and Indian Railway Catering and Tourism Corporation (IRCTC). Indian Railways has sought DIPAM’s view, officials said. “The decision on IRCTC and RailTel has been left to DIPAM because it pertains to listed entities,” said one of the officials, who did not want to be identified.

The proposal to merge the two entities is based on the recommendations of Sanjeev Sanyal, a former chief economic adviser in the finance ministry, who is currently a member of the Prime Minister’s Economic Advisory Committee. The railways want to ensure that the merger of the units, which operate in different areas, should not create new problems that could affect their operations and be a cause of concern for investors, said another official privy to the discussions. “Both have very different areas of operation, with RailTel slowly growing its footprint in the broadband space through RailWire and data center leasing,” another official said.

Sanyal had last year made a number of proposals to restructure the national carrier to make it leaner and more efficient. A key focus of his proposals was to minimize overlap within the operations of the Indian Railways. In September last year, the railway board decided to implement these proposals and it has to submit a monthly progress report to the state secretariat. Another recommendation, that IRCTC take over the operation of Central Railway Information Systems (CRIS), is also with DIPAM. But there are concerns within the railways about the takeover as CRIS has a wider role in the Indian Railways as it facilitates the operation of procurement, freight information systems, track management systems, among many other core functions, unlike IRCTC which is a profit-oriented entity that operates e-tickets and catering.

The railways have implemented some suggestions including closure of Indian Railways Organization for Alternative Fuel.

Sanyal had recommended closure of Central Organization for Modernization of Workshops (COFMOW) and Central Organization for Railway Electrification (CORE), which are under implementation.

“COFMOW will be shut down next year (2023-24) while CORE will be shut down in phases,” said a senior railway ministry official.