Privatisation of Railways aims at 15% Indians to the exclusion of others  

The Railway Minister wants Indian Railways to act as facilitator, competitor and also regulator of private players! How feasible is this brilliant plan? ‘Metro Man’ E Sreedharan thinks it foolish

Privatisation of Railways aims at 15% Indians to the exclusion of others  
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AJ Prabal & S Raju

The Government’s obsession with ‘world class’ and ‘high tech’ facilities to cater to 15% of the Indian population is at the heart of its move to privatise Indian Railways. For 70 years the Indian tax payers have paid to run the Railways as a public service and taxes have funded the expansion of the world’s largest railway network.

Acquiring land, laying tracks, building the infrastructure, training the manpower and arranging for signalling systems and safety measures were all funded by the poorest of the tax payers. But the BJP Government, which first abandoned the Railway Budget to take the focus away from it, from the beginning made its intentions clear. It wanted faster trains, world class trains and railway stations like airports!

This child-like enthusiasm betrayed ignorance of what the country really needed. Till 20 years ago Railway tracks expanded every year at a painfully slow pace because the Government did not have resources. Most of the tracks were laid before Independence. As a result, large parts of the country remained unconnected with Railways.

The ‘local trains’ or suburban train services in cities like Mumbai and Kolkata ran at a loss. But they transported millions of people every day to the metros. They are packed like sardines and accidents are normal. The traumatic and time-taking trips take a toll on commuters but cheap, public transport is necessary to keep the metro cities running.

The demand for seats and berths in long-distance trains have always outstripped by far the supply. Long waiting lists, black marketing in tickets, emergence of touts and unfair quotas for the government departments, for MPs and MLAs, for the Army and so on continue to deprive ordinary passengers reserved seats and berths. General compartments can get crowded enough for passengers to occupy the toilets for the duration of the journey. Tickets are not available naturally when you need them the most, at short notice and in emergencies. Even higher charges and ‘Tatkal’ scheme does not always guarantee a berth.

So, how will privatisation solve the problem? The Government believes that high speed private trains with better seats, airconditioned coaches and female attendants like airhostesses will encourage passengers to pay higher fares. Indian Railways makes its profit through freight and carrying passengers is a losing proposition. So, why not outsource the passengers to the private sector?

The Government’s reasoning is also dictated by the two freight corridors, again funded by tax payers, which will become operational next year. Once the freight trains, at least 60 or 70 percent of them, shift to the freight corridors, the congestion on the existing railway tracks would ease and more passenger trains could be started without adding to the tracks or staff. The options could be to ease the congestion on local trains, launch more suburban trains and more long-distance trains. Yes, the Railways in the short run would have lost money. But it would ensure higher mobility to people, make their journey more comfortable and increase productivity.

But no, the Government’s priorities are the richer people who can afford to pay more. The experience of the two Tejas trains show that the average occupancy in one (MumbaiAhmedabad) has been 70 percent and less in the other ( Lucknow-Delhi). With the dynamic fare in these trains going up to or more than the airline fare, only a small percentage of passengers can afford them. Why should public facilities built at public cost over the years benefit only a few, is the question.

There are other fallacies in the Government’s argument. Private players, it says, would bring in an investment of Rs 30,000 Crore. This money, even if it is invested, will almost certainly come from public sector banks as loan. Once again it will be public money which will prop up so-called private investment. Why can’t the Railways borrow the same amount and run the same services? It already runs exclusive trains like Rajdhani, Duronto and Shatabdi Expresses. Not to speak of the Palace on Wheels for the tourists. If it is really keen to run luxury trains for well-heeled passengers, what stops Indian Railways from doing it?

The claim that the private players will bring in technology and create jobs is also a dubious claim. Private players with no experience of running trains will actually poach personnel from the Railways. Some foreign companies will be roped in and massive commissions will exchange hands. As elsewhere in the private sector, people at the top in these private companies may earn a higher salary for some time. While others like the hostesses will be made to work for 18 hours for a paltry salary of Rs 15,000 a month—as the hostesses in Tejas trains have discovered.

E. Sreedharan, the Metro Man, is credited to have said that the scheme is ‘foolish’ and is bound to fail. He cited the example of Metro Rail and pointed out that the expectations were that private players would bring investment and technology etc. But while two or three private entities did come forward, they all dropped out. What is the guarantee that history will not repeat itself in the next five or six years?

The Railway Minister Piyush Goyal was categorical in saying that Indian Railways would not be privatised. Only facilities were being upgraded through Public-PrivatePartnership, he claimed at Indore in January, 2020. But in the last eight months his ministry has moved to open up 109 routes, reportedly 50 stations and Goods Sheds to private players. This was confirmed by NITI Ayog CEO Amitabh Kant in September.

The process was expedited during the lockdown and without too many public consultations or discussions in Parliament. As many as 15 companies are learnt to have expressed their interest in running the private trains with Indian Railways lending the services of the driver and the guard. Naturally none of these companies has any experience of running Railways. The only eligibility was that their net worth should be at least Rs 1,100 Crore.

The bidders include companies like IRCTC, GMR, BHEL, L&T, RK Associates and Hoteliers Pvt Ltd., Sainath Sales and Services Pvt Ltd. and Wellspun Enterprises Ltd. Many of these companies are in the business of laying roads and infrastructure. It could be a coincidence but some of these companies did manage to grab hefty contracts during the past six years and several of them are from Gujarat.

The 35-year contracts that will be awarded to run private trains, according to documents, will require private companies to pay fixed Haulage charges, Energy charges and a part of their earning. In return they will use not just the driver and the guard of Indian Railways but also the tracks, stations, signalling and safety infrastructure in place.

The National Infrastructure Pipeline Report, prepared by a Finance Ministry taskforce, estimated that a sum of Rs 111 lakh Crore would have to be spent on infrastructure between 2020 and 2025. It also recommended that during this period 500 private trains be allowed and 225 Railway Stations privatized.

Replying to a question in the Lok Sabha in September, 2020 the Government said that how to regulate fare charged by private trains was being considered. But the bidders were clearly told that they would be free to fix the fare. The bid documents make no mention of regulation or a Regulator.

In July the Government had laid down the restriction that each bidder would be allowed to bid for only 3 of the 12 clusters. But the restriction was lifted, allowing bidders to bid for all 12 clusters. This either means there were few serious bidders or it could mean that the plan is to fix the process to award the contract to the chosen or pre-decided bidders. The manner in which the bids are being processed, observers do not rule out the possibility of further changes and tweaks.

Indian Railways is sitting over vast and vacant land. And not surprisingly, these land mass have acquired value over the years. Many private bidders are said to be eying the real estate in possession of the Railways under the garb of developing railway stations.

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