Indian Railways giving room to Private Partners

Context

Indian Railways is looking for most of the facilities for the passengers, working for greater participation of the private sector.

Background

The Indian Railways is working closely with the recommendations of NITI Ayog has invited the private sector participation in IR on 100 railway routes with 150 modern world class trains which will involve private investment of about 30,000 crore. With this, IR aims to provide world class facilities to its passengers. The majority of these trains are to be manufactured under “Make in India” initiative. The railways have decided the routes of private trains into 12 clusters. In line with this thought, IR had last year started India’s first “Private Passenger Train” on Delhi-Lucknow route , run by IRCTC.

Committees

Two committees have been set up to bring fast-track changes in IR. The committee of Metro Man Dr E Sreedharan looked at enhancing transparency and complete decentralisation in commercial decision-making, including tendering and contracts in IR, the second high-powered committee led by Bibek Debroy (present chairman of the Prime Minister's Economic Council) dealt with comprehensive reforms and liberalisation in the railways. The past saw India as traditionally a land of opportunities but as far as infrastructure is concerned – high on promise and low on delivery, but this time the scenario will change with the introduction of private projects.

Strength of Indian Railways

• IR, the largest railway in Asia and 2^nd largest in the world is recognized as the most economical and dependable mode of transport.
• It is a well organized mode of transport. With fixed routes and schedules, the services are reliable, uniform and certain.
• It is suitable for heavy and bulky goods.
• The carrying capacity is extremely large. With 21000 passenger and freight trains running daily, IR connects across length and breadth of country.
• It is the largest public sector employment providers in the country with over 13 lakhs employees.
• One of the safest modes of transport. Chances of accidents and breakdown are minimum as compared to the other modes of transport.

Weaknesses of Indian Railways

• Facilities are not comparable to international standards.
• Delay in timings spoils the Image.
• In spite of having a vast network, it still doesn’t reach to interior India where many regions are left unconnected.
• Operating ratio is very large.
• Lack of skill management and proper training of employees, especially low grade cadre.
• Little focus on hygiene and cleanliness.

Opportunities

Introduction to Privatization could lead to manifold Opportunities like

• Improving the quality of services along with drastic reduction in journey time.
• Improved infrastructure
• Improved work ethics and punctuality
• Technological, operational and maintenance advancement will lead to low operating ratio.
• Increased revenue for railways as the national transporter will receive benefits in the form of energy charges as per actual consumption, fixed per kilometer haulage charges and additionally the percentage share of the revenue generated from operating the trains.
• Boost the availability of train on high demand routes and thus will eliminate the need of waitlisted tickets.
• Enhanced safety measures.
• Open the doors for further employment opportunities
• Passengers can experience world class facilities and will be compensated for delays.

Challenges

• Railways that till date is said to enjoy the status of natural monopolies will end.
• Profit motive or rather profiteering by private players could lead to high fares. Railways tagline “lifeline of the nation” might lose its relevance as some citizens might not be able to afford the increasing fares.
• A conflict of interest might appear between the private players and the government.
• One of the most negative features associated with a private entity is job insecurity.
• Railways basically works on the principle of social welfare whereas the private sectors are mostly profit oriented which might result in adversely affecting the common man’s interest.

Coping with the Issues: The Way Ahead

Indian Railways should need to understand that the entry of private players will also open the door for new challenges for them too. On one hand, they will gain in terms of reputation building and revenue earnings, on the other hand they will always be held accountable for the performance of their counterpart. It will be their key responsibility to maintain transparency and strong vigilance over the entire system. They should make sure that their Corporate Social Responsibility (CSR) is duly met. IR should makes sure that the policy of privatisation commensurate with the basic principles of

• Pricing of services in accordance with the cost incurred.
• Protection of consumers interest.
• Promoting efficiency and economy.
• Creating positive environment.
• Human resource development.

As recommended by the Bibek Debroy Committee, a separate independent regulator needs to be established. The independent regulator shall ensure fair and open access and set access charges, establish tariffs in cases where there the market fails to discover a price and act as a dispute settlement body. The report recommends setting up a Railway Regulatory Authority of India (RRAI) statutorily, with an independent budget, so that it is truly independent of the Ministry of Railways.
To implement these recommendations of the committee, the government has thus expedited the process of establishing the Rail Development Authority.

Connecting the Article

Question for Prelims

With reference to the introduction of privatization in Indian railways, consider the following statements.

1. It will raise the technological, operational and maintenance standards in railways.
2. It will allow easy access of railways by all sections of the society.

Which of the statements given above is/ are correct ?

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Question for Mains

There is also a point of view that introduction of private players in the Indian railways, will not only create conflict between government and the private sector, but also increase job insecurity. Critically examine.