Railway Minister Piyush Goyal recently clarified in a tweet that the current services of the Railways will continue to operate and that there is no move to privatise it. The tweet was in response to the criticism from opposition parties after the Government announced its plans to allow private companies to run trains on its routes.
The Ministry has clarified that 151 trains run by private operators will be introduced on 109 routes where there are demands for additional services, and will not affect existing trains. The Ministry has already invited a Request for Qualifications (RFQ) from private players. If things proceed as per plans, passengers may be able to board private trains by April 2023.
The project is expected to bring in private sector investment of about Rs 30,000 crores. A majority of these trains will be made under the Make in India initiative and private operators will have to pay fixed haulage charges, energy charges as per actual consumption and a share in gross revenue determined through the bidding process.
These private trains will be high-speed ones designed for a maximum of 160 km/hr, comparable to the likes of Tejas, Rajdhani and Vande Bharat. More than two dozen Indian and global players, including Tata Realty and Infrastructure, Adani Ports and SEZ, Essel Group, Siemens, Hyundai and Bombardier are among the companies that have shown interest in operating these trains. Mumbai-New Delhi, Chennai-New Delhi, New Delhi-Patna are some of the routes shortlisted for private players to run trains.
The Tejas Express, launched in October, last year, running between Lucknow and New Delhi and Ahmedabad and Mumbai, is the closest to what India has for a private train. While the physical inventory – the locomotives, security personnel, guard and loco pilot belong to the Indian Railways, the ticketing, catering and housekeeping have been contracted to private players via the Indian Railway Catering and Tourism Corporation (IRCTC). These trains have modern facilities including reading lights, bio-toilets, LED TV sets and automatic doors.
The push for privatisation
With growing concerns over mounting losses, the call for privatisation has been a growing one. Since the privatisation of the airways and with better connectivity on road, the Indian Railways has been losing passengers steadily.
Those in support of privatisation argue that this would lead to better trains infrastructure and facilities for passengers, with a drastic improvement in the quality of services and overall cleanliness – an issue that has dogged the Railways.
Those in favour state that privatisation could help prevent the Railways from going the Air India way. The increased competition from private players would also prompt the Railways to pull up its socks in areas where it lags.
In 2015, a committee headed by Chairman of the PM’s Economic Council, Bibek Debroy, had recommended a vast set of sweeping changes, which included the liberalisation of the Railways and the entry of private players in it. The committee had recommended that non-core functions of the railways be privatised. This includes running schools and hospitals.
It had proposed the privatisation of construction, and maintenance of infrastructure and the manufacturing of locomotives, wagons, coaches and other parts. The Committee had also recommended that private players be encouraged to run both freight and passenger trains in competition with the Indian Railways.
Early this year, NITI Aayog had also pitched for bringing in private players to run trains. The draft proposal by the thinktank had said that private trains on a particular route will have a head start of 15 minutes on other trains that would be running on the same route, will run at a maximum permissible speed of 160kmph, and have its own crew and guards.
The voices against
However, many are also critical of the Government’s move towards privatisation. Critics argue that bringing private players in will affect the affordability and inclusivity factor that the Railways is known for. With private trains competing with airlines and air-conditioned buses, the companies running the trains will have the freedom to decide on the rates, which could be subject to market forces.
There are also concerns that by bringing in private players, the railways may enter into a profit-making model, which could then mean a greater focus on routes that are profitable, in lieu of those that are not. Currently, the railways carry more than 23 million passengers a day across 13,000 trains. Emphasising on some routes and ignoring others which connect the interiors of the country, could also widen the rural/urban divide.
Further, by privatising only certain routes and parts of the Railways, coordination between various parts, and accountability could also be areas of concern.
What other countries have done
A number of other countries have privatised parts of their Railways, some successfully, others not so. In Britain, the process of privatisation of the railways, which had been under state ownership since 1948, started in 1994 and was completed in 1997.
The highly controversial privatisation process which has been criticised for causing price hikes and unreliable service has led for calls to nationalise the railways. Results from a YouGuv poll showed that 56 per cent of the public supported the nationalisation of the railways. Today, a number of UK’s train lines are run by other EU countries, including Germany, France and Italy.
In Japan, the country’s railways was privatised in 1987 and broken into six regional rail companies and one freight company under the Japanese Railways Group. Despite that, fares have not hiked up drastically, and the privatisation of the country’s railways is considered a success.
In Italy, Trenitalia, a subsidiary of the state-owned Ferrovie dello Stato that manages infrastructure and services on the Italian rail network, is the main operator. In 2012, Nuovo Trasporto Viaggiatori became Italy’s and Europe’s first private access operator, running high-speed trains of 300km/hr.
In the United States, freight transportation dominates the rail transport scene, mostly run by private companies. Amtrak, the National Railroad Passenger Corporation, provides medium and long-distant intercity service in the United States and to nine Canadian cities.
Meanwhile, in India, expert panels such as the Debroy Committee and the 2001 Rakesh Mohan Committee have long recommended the setting up of an independent regulator that will promote healthy competition while protecting the interests of the various stakeholders.