October , 2019
Privatisation- a step in the right direction?
14:05 pm

Ankit Singh

The Indian Railways on September 27 provisionally selected 50 key routes in order to collaborate with private operators to run modern passenger trains. The national transporter asked its zones to examine the feasibility of the selected routes. The decision taken in a high-level meeting of the Railway Board comes under its 100-day action plan. This is being done to privatise key routes for providing world class services.

At the meeting, discussions were held to identify the routes and the number of services that can be allowed to run in order to prepare the request for quote (RFQ) and concession documents for the selection process. It was confirmed that private operators will run trains on routes allocated to them on payment of applicable charges. Shivaji Sutar, CPRO, Central Railway, informed BE, “It was a primary level meeting between the board members. The meeting was attended by officials from Central Railway. During the meeting, the members discussed the pros and cons of the action plan to privatise the operations of a few trains.”

The Indian Railways has witnessed tremendous growth in the areas of rail safety and modernisation in recent years. However, in terms of performance, especially punctuality, the 2017-18 fiscal has been reported to be the worst for Indian Railways. According to Indian Railways officials, the punctuality of trains suffered severely because of elaborate maintenance projects that were undertaken. Also, after the implementation of the Seventh Pay Commission, the Indian Railways was reported to be struggling with burgeoning staff and pension costs in the back-drop of stagnating earnings and under-investment.

The Indian Railways plans to mitigate these underlying crises by investing in public-private partnerships. The recent announcement of allocating 50 key routes to private players is the first step in that direction. But will the recent initiative be able to fix the resource crunch?

The announcement has raised objections among the senior employees of the Indian Railways. S. K. Bandopadhyay, General Secretary, Eastern Railway Men’s Union, told BE, “The board has planned for 150 trains in these 50 routes. To attract private companies, the government will give the particular time slots which are favourable to private agencies as was done recently in the case of IRCTC’s Tejas Express and will eventually stop the operations of popular Indian Railway trains. This will lead to the giving away of profitable routes and timings to private operators. The government is directly hitting the railway under the belly through these initiatives. This is basically privatising the railway industry.”

According to Bandopadhyay, this will further deteriorate the economic condition of the Indian Railways. He said, “The government has chosen the railway tracks which are mainly tourist-oriented and busy routes. The private operators will decide the fare and pay structure for the employees of the passenger trains run on these routes. The Railways will lay the track and do the maintenance job. The Indian Railways will provide the necessary infrastructure but the profit will be taken by these private operators.”

The introduction of private players in Indian Railways may also incur an escalation of the cost of travel. Bandopadhyay said, “This will create a huge effect on the poor people of this country. Railway is a social utility service. The trains which are run in suburban areas are mainly subsidised. Now these routes are being handed over to private operators. The private agencies are here for business so they will try to make as much profit from running these passenger trains. They will definitely increase the rate of fare which will affect the poor and daily wage earners adversely.”

However, some transport experts are hoping that this move will help the Indian Railways to regain its credibility in terms of performance and efficiency. Dr. Sudakshina Gupta, Head, Department of Economics, University of Calcutta, told BE, “Privatisation can help to increase the efficiency of the Indian Railways. The reason is that players will be operating on a profit motive and will economise their operations. They will try to reduce the wastage of resources, unfortunately overlooked by the PSUs, in order to maximise their efficiency and revenues. It will have a mixed effect on the economy. Due to privatisation, there will be more movement of capital.”

The move to privatise certain routes is based on the logic that it will maximise efficiency and revenue earnings. bHowever, as Gupta stated, “The passengers may have to pay more. Now there will be no subsidy on these routes.”



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