Who is benefited by privatising Railways?

Indian Railways has invited private companies to operate 151 modern trains on 109 routes. The initial step towards the privatisation has been taken through the invitation of bids. However, the Indian Railways is preparing to hand over only 5 per cent of the total operations to the private sector.

Hyderabad: Indian Railways has opened its doors to private companies for the first time in its history. Private companies were invited to operate 151 modern trains on 109 routes. Though the proposal has been in anticipation for some time now, the initial step has been taken towards implementation through the invitation of bids. The question being asked now is how much will it benefit the railways, the private companies and the people?

Modernization and expansion of railways is not a new issue. So far several committees have worked on this. However, the latest bids were invited in 2015 as per the recommendations of a panel headed by Vivek Dev Roy. The Committee says that this should not be called privatisation but liberalization. That is also true because the Indian Railways is preparing to hand over only 5 per cent of the total operations to the private sector.

 Operation of the first private train - April 2023

 Estimated investment - Rs 30,000 crore

 Interested Companies - 20

Why is this decision taken?

From a passenger point of view, there is still a lot of need for more trains between the big cities. The Railway Board accepts that 5 crore passengers could not be allowed on the trains due to lack of capacity. This demand is even higher during the summer and festive seasons. Railways is apprehensive that if it does not expand its infrastructure, it will lose its share of the business to the road transport sector in the next few years.

In addition, the Dev Roy Committee recognized the need to take forward 'make in India' policy of the government. The committee also concluded that passengers are willing to pay a higher price if there is a guarantee that the quality of travel will improve. That is why private investment is being invited into the operations of trains.

Is it good for passengers

Monopoly is not good in any field. It is better if there is competition. However, the Indian Railways has so far kept affordability of the passengers rather than giving preference to income while fixing the ticket rates. It used to offset some of the deficit by a little more tariff on goods transport charges. And now we have to see what benefit will accrue to the passengers with the decisions of the private companies.

The private companies may not think like Indian Railways and concentrate on profits. One thing is for sure; the quality of service is most likely to improve. Passengers may not mind a slight increase in prices. The decision, which currently looks like a pilot scheme, if successful, may extend to more routes by inviting more private participation.

Companies in the fray

According to the first bidding process, investments of about Rs. 30,000 crores are expected. About 20 companies are interested in running 151 trains with 16 coaches each. Among them are Adani Port, Tata Realty and Infra, Essel Group, Bombardier India, Siemens AG and Macquarie Group. Airlines such as Vistara, Indigo and SpiceJet are also showing interest.

Adani Port‌: This Company has prior experience. It already has 300 Km private railway lines connecting to ports. It has experience in undertaking large scale infrastructure projects. It also has a stake in Metro Rail projects under operation.

Essel Group: The Company has been carrying out various government infrastructure projects for decades. Essel also acquired the first railway project in 2018 through its 'Essel Infraprojects' division.

Tata Realty & Infra: The Tata Group subsidiary is responsible for the Hinjewadi-Shivaji Nagar Metro project in Pune. It was also involved in the construction of the underground line on the Delhi-Meerut Regional Rapid Transit System.

Bombardier: This German company is also a strong competitor. It is the first foreign multinational company to have set up its own rail vehicle manufacturing plant in our country more than 50 years ago.

Alstom: This is another foreign company from France. The Company has undertaken metro projects in several cities in India.

Rising shares

Shares of companies affiliated with trains are rising in the stock market in the wake of Indian Railways announcing plans to allow private companies to undertake the operations of passenger trains. Shares of companies like IRCTC, Rail Vikas Nigam, Ircon International, Titagarh Wagon, Texmaco Rail, Simco, Stone India have gained significantly in recent times.

Some countries with a privatised train transportation system

Canada 1995

Mexico 2000

Japan Started in 1980s

Several private companies in America have their own rail routes.

 Train transport in Switzerland is mostly privatized.

 Germany has assigned goods transport and short-distance passenger routes to the private sector.

 History of private trains in Britain is quite long. At the moment, rail transport is managed by the private sector under government control and monitoring.