Privatization of Indian Railways

Privatization of Indian Railways

Indian Railways has planned to privatize as many as 150 trains with the initiation of the India’s First fully private train Tejas Express.

The Bibek Debroy committee recommended that the rail industry needs to be liberalized by allowing the entry of private operators to provide services. After privatization of the Tejas Express (to be run by the IRCTC), the government is currently in the process of forming a task force to draw a blueprint for handing over operations of as many as 150 trains and a total of 50 railway stations to private operators. India is Asia’s largest and world’s second-largest rail network and one of the oldest railways established, India started railway operations in 1853, the first train was between Mumbai to thane.

Need for Privatizing Indian Railways

• Low Quality of Service-Indian Railways deserves the credit for serving the largest democracy in the world, but it faces criticism, particularly in case of aspects like service, catering, and punctuality.

• Low Internal Revenue: The problem of cross-subsidization has severely affected the internal revenue generation of the Indian Railways.

• Cross subsidization: Money earned through freight traffic is diverted to meet the shortfalls in passenger revenue, and thus the development of freight traffic infrastructure suffers.

• Increasing Number of Accidents: Repeated railway accidents have further raised questions on government ownership of railways.

Bibek Debroy Committee key recommendations-

• Link increase in passenger fares to better passenger services
• Create a separate company for railway infrastructure
• Open access for any new operator who wishes to enter the market for operating trains
• Separate suburban services and run them as joint ventures with state governments.
• Private entry into running both freight and passenger trains in competition with Indian Railways

Privatization of Railways-Pros

• Improved Infrastructure-Privatization will lead to better infrastructure which in turn would result in improved amenities for travelers. Currently, Indian Railways is marred by mismanagement in the form of stinking washrooms, lack of water supply and dirty platforms, it is expected that a private company will ensure better amenities.

• Normalization of prices-Improvement in quality of services has to be matched up by a rise in charges paid by the travelers. However, the issue of price rise will be solved when private players are allowed to enter the sector since the move would foster competition and hence lead to overall betterment in the quality of services.

• Improved Security-Private participation can lead to better accountability and monitoring, which can keep a check on rising accidents in railways.

Privatization of Railways-Cons

• Limited Coverage: An advantage of Indian Railways being government-owned is that it provides nation-wide connectivity irrespective of profit. Privatization of railways would mean the railways will become a profit-making enterprise; this would lead to the elimination of railways routes that are less popular. Thus, the privatization of railways can have a negative impact on connectivity and further increase the rural-urban divide.

• Issue of Accountability: The privatization of Indian Railways is not easy, as it covers every part of India and runs for 24×7 hours. The whole railway system cannot be handled by a single party or coordination will be very difficult if area wise given to private parties.

• Impact on the Economy: Indian Railways is the backbone of India; it provides low fare transportation to agricultural and industrial trade. Therefore, the privatization of Indian railways shall definitely affect the Indian economy at large.

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