Privatisation improves efficiency

New operators will improve services but the govt should also set up Railway regulatory authority to protect stakeholders' interests

AuthorPublished: 15th Oct 2019  12:10 amUpdated: 14th Oct 2019  10:05 pm

The Tejas Express between Lucknow and New Delhi, labelled as India’s first private train, is a major step towards privatisation of the Railways and its success could eventually lead to the end of the Railways’ monopoly on trains in India. The physical infrastructure of the train — locomotives, coaches, loco pilots, guards and security personnel — will remain in the Indian Railways’ hands, while the services provided, including ticketing and refunds, parcels, catering and housekeeping, will be contracted to private players through the Railways’ subsidiary company Indian Railway Catering and Tourism Corporation (IRCTC) under the public-private partnership model. The Tejas Express is the product of a seven-member committee set up to look into the privatisation of the Railways under the chairmanship of Niti Aayog member and economist Bibek Debroy in September 2014. The committee had recommended that Railways be allowed private sector competition and suggested that all the things that aren’t germane to the operation of the Railways, such as construction, be handed over to the private sector. Operational efficiency, punctuality and passenger amenities should be at the centre of any reforms in the Railways. Tejas offers facilities for rail passengers that were virtually unheard of earlier in the country — Rs 25-lakh travel insurance, luggage pick-up and drop, and monetary compensation in case of delays. It is no surprise that the Railway unions are opposing the privatisation move on the ground that the cost of train travel will go up. They fear that lakhs of employees will become jobless or no longer have job security.

The best way the government can allay these apprehensions is to establish the long-overdue Railway regulatory authority. An independent regulator that can promote healthy competition and protect the interests of various stakeholders was mooted not only by the Debroy panel but also by the Rakesh Mohan Committee in 2001. It must be noted that liberalising the entry of new operators into railway operations can be a viable option to encourage growth and improve services. If the Tejas experiment proves successful, it could hasten the privatisation of the Railways, starting with semi-high speed trains. The government has formed an empowered group to prepare a feasibility plan for upgrading 50 railway stations to world-class standards and allowing private players to operate 150 trains. With private siding, port connectivity and ‘own your wagon’ schemes among others, Railways’ freight operations are already open to private players. These schemes allow private parties to lay rails connecting ports to export their products with their own dedicated wagons. Private sidings also allow businesses to invest in building siding for their freight operations. While the manufacture of wagons is mostly in private hands, now passenger coaches are also to be produced privately for Railways.


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