An Indian railway is the 3rd largest rail networks in the world. It deals with millions of passengers and a large number of employees. After the privatization of Tejas expresses (IRCTC) government has planned to hand over operations of 150 trains and 50 railway stations to private operators.
Pros of Privatizing Railways:
1. Investment from private operators:
This project would entail a private sector investment of Rs.30,000 crores
2. Reduction in the demand supply gap:
The Indian railways deal with 8.4 billion passengers and almost 50 million people are waitlisted. The demand supply gap can be reduced by introducing more number of trains.
3. Modern Technology:
Private players can bring in specialized technologies to modernize and upgrade the Indian railways.
4. Better facilities:
Better facilities will give passengers a safer and comfortable travel experience.
5. Reduce transit time:
Upgrading Indian railways will reduce transmit time and the trains can arrive punctually at the stated time.
6. Made in India:
More manufacturing of coaches and other railway equipments can improve the manufacturing sector in India.
7. Boost Job creation:
There will be more job creation due to private participation.
Cons of privatizing railways:
1. High fares:
There will be no government role in fixing fares. This can result in increase in fare which will impact common man’s life. High fares will make people to prefer air ways and the objective of railways as a public welfare transport organization will be defeated.
2. Connectivity may suffer in non-profitable routes:
Private players are demand centric so there can be a reduction in number of trains available for non-profitable routes.
3. Lack of co-ordination between state and private players:
The responsibility of private investor is in the procurement and maintenance of coaches. The coaches are operated by railways so there is a lack of fixed responsibility.
4. No reservation in Jobs:
Private sector is not bound to follow reservation this will deprive the employment opportunities of people on the margins of society.
5. No independent regulators:
There are no independent regulators to resolve the disagreements between the state and private players. The Bibek Debroy committee also recommended independent regulator to provide a level playing field to private players and resolve conflict of interest.
Way forward:
The government can privatize non-core functions of railways like catering, cleanliness, ticket disposal and can corporatize core railways which will restructure a state owned asset into a corporation.
The government should also continue with the cross subsidization to avoid hike in passenger fare.
It is important to modernize the railways but the project of privatization of railways should not make it a mere profit- generating capability.
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