Modi government to invite contestants to run railway routes

The Narendra Modi-led government has started its second term by keeping infrastruture as one of the main targets to be acheived. In order to make infrastruture a plus point, Modi government is keen on improvising the railway roadmap.

However, during the Budget presentation, Finance Minister Nirmala Sitharaman accepted that the government did not have the fiscal space to make the kind of heavy investments that are required to modernise the Railways. As such, she proposed to use Public-Private Partnerships wherever possible.

In the days since, it is becoming clear that to begin with, the government will be inviting private companies to own and operate trains on select routes. This is one of the big ideas of the government’s “100-day plan” for the Railways that has been approved by the Prime Minister’s Office. Another significant initiative is to “corporatise” the seven production units that build coaches, engines, and wheels.

Since the government's budget for transport and railways is very less, the government is inviting the private sector and allowing them to invest and operate the work.

A holding company called the Indian Railway Rolling Stock Company (IRRC) will be put in place and it will control and independently manage all these factories and take care of the bottom line. Railway officials expect the proposed holding company, IRRC, to be one of the biggest rolling stock companies in the world, beating bigwigs such as Bombardier, Siemens, GE, etc. The IRRC has been modelled along the lines of China’s CRRC Corporation Limited, which was created by amalgamating around 40 big and small manufacturing units in 2015 into one corporate entity. The CRRC, a publicly-traded company, is currently the largest rolling stock company in the world.

The powerful trade unions have raised concerns about the “privatisation” of the Railways, and its impact on their members. But Railway Minister Piyush Goyal has clarified that the government is only thinking of “corporatising” some units, and that “there is no question of privatisation”.