Perils of privatisation

Instead of addressing systemic issues facing Railways through reforms, the NDA govt appears to have only one solution —privatisation

The NDA government’s move to privatise the Railways is fraught with dangerous consequences with a potential to adversely affect the lives of crores of people dependent on affordable travel. For Prime Minister Narendra Modi who takes pride in the humble beginning of his life journey as a chaiwala at a railway station in Gujarat, it would be ironic to preside over the dismantling of the country’s lifeline, a national asset that belongs to the people. The global experience of the privatisation of rail networks has been anything but encouraging. In countries like the United Kingdom and Argentina, privatisation policies have, in fact, backfired with train fares overshooting the cost of flights and the irrational decisions of the railway companies adversely impacting the efficiency of trains. When the railways are viewed as the transport of masses, privatisation becomes tricky. In several advanced countries, including the United States, Canada and Europe, the governments run the railways as a social responsibility. The Centre appears to be bent upon throwing the floodgates open to the private sector. This will only result in the transfer of valuable railway assets into the hands of corporate entities while the government will not have any say in deciding the passenger fares in future. The privately-operated trains would never be cheaper than those run by the government. As a result, the trains could be out of the reach of the common public. In the Indian context, privatisation of Railways is not a feasible idea from an economic point of view.

What is needed is a comprehensive reform of the functioning and organisational structure of the Railways to improve efficiency and quality of services. In the past, several expert committees had recommended a complete overhaul of the organisation to expedite decision making and create a coherent vision for the organisation. One of the biggest advantages of the Railways being a government-owned entity is that it provides nationwide connectivity to bring regional development. This would not be possible with privatisation since routes which are less popular may be neglected, thus having a negative impact on connectivity. It may also render some parts of the country virtually inaccessible and exclude them from the process of development. There are several systemic issues like corruption, bad planning and mismanagement plaguing the Railways for decades. Instead of addressing them through reform measures, the NDA government appears to have only one solution for all of them—privatisation. Not just the Railways but several public sector undertakings are set to face the axe in the name of disinvestment policy. Unbridled privatisation appears to be the name of the game while the real need is for strengthening the independence and autonomy of the PSU boards and infusing professionalism.

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