The Centre is likely to announce a roadmap for the merger of six public sector undertakings (PSUs) under the Ministry of Railways in Budget 2022-23, starting the process for a radical restructuring of these organisations.
The mergers were recommended by principal economic adviser Sanjeev Sanyal in August 2021 in a report on the rationalisation of government bodies under the railway ministry.
Top government officials have told Moneycontrol that Finance Minister Nirmala Sitharaman is likely to announce the path towards the merger of Rail Vikas Nigam Ltd (RVNL) with Indian Railway Construction Ltd (IRCON), RailTel Corporation with Indian Railway Catering and Tourism Corporation (IRCTC) and Braithwaite & Co Ltd with Rail India Technical and Economic Services (RITES) when she presents Budget 2022-23 on February 1.
The Railway Board has suggested a timeline for the merger of the six PSUs, the officials who did not wish to be identified said.
“Two out of the three railway PSU mergers are likely to be completed next year but adherence to timelines will depend on regulatory approvals,” one official said.
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The mergers of RVNL with IRCON and RailTel with IRCTC are likely to be completed in 2022-23. The railway ministry expects the mergers to boost valuations of the PSUs, which would be useful for raising funds on better terms.
RVNL is tasked with implementing projects for the creation and augmentation of rail infrastructure; IRCON is a specialised infrastructure construction organisation.
RITES is a consultancy that exports rolling stock and Braithwaite manufactures rolling stock.
The proposed mergers have the potential to create monopolies that will command greater valuations when offered for sale in parts or whole.
The process for the merger of the Railway PSUs was initiated in September with the Finance Ministry asking Indian Railways to come up with a plan to merge seven public sector companies proposed by the principal economic adviser.
It also asked the Railway Board to chalk out a plan to downsize operations within Indian Railways to help organisations focus on their core competencies of running and maintaining railway services.
Sanyal highlighted the overlaps of operations between RailTel, IRCTC and Centre for Railway Information Systems (CRIS) in a report titled Rationalisation of Government Bodies, Proposal for Ministry of Railway.
RailTel provides telecom infrastructure through optic fibre networks along railway tracks, IRCTC is the main internet ticketing arm of Indian Railways and CRIS is an autonomous society to develop software for passenger ticketing, freight invoicing and passenger train operations.The report recommended winding up CRIS after handing over all the work it does to IRCTC. The report noted that IRCTC’s passenger reservation system is currently operated by CRIS, for which the company and Indian Railways pay the society.