The Privatization of Indian Railways

Index

1. Introduction
2. What is privatization?
3. What triggered the privatization of Indian Railways?
4. Privatization of Indian Railways
5. Advantages
6. Disadvantages
7. Tejas Express
8. Privatization of railways example: Britain

Introduction

Indian Railway is a pure monopoly, Indian citizens have no other option than depending on the railway services of our government. And like every monopoly, Indian Railways have become stagnant and slow. The development in Indian Railways is slow compared to other developing countries. Thus, today we will discuss in detail the privatization of Indian Railways and its effects.

What is privatization?

Privatization is when the ownership of any government entity is transferred to a private owner, a non-government party. The other privatization is when a company transitions to private ownership from public trading.

What triggered privatization?

The Indian Railways is a full-fledged government-owned entity that is incurring losses continuously every year. Air India was also a government air service which did not end well. The heavy competition and better services of the private airlines threw Air India into a slump of losses. The heavy losses of Air India have made Niti Aayog of India consider privatization of Indian Railways so that it does not follow the same fate as Air India.

The railway ministry is making big decisions for saving Indian Railways. In the following years, climate change will make public transportation necessary. Indian railways have to be prepared for such a situation with world-class transit.

Privatization of Indian Railways

The privatization of Indian railways is set to take action as Niti Aayog of India has been recommending this idea for a long time. The Planning Commission of India is planning for the development of the railway station along with the area around it and which is going to attract private investment. The Indian Railways plan to develop 400 railway stations, but the plan is not progressing according to the schedule. Thus Indian Railways has decided to privatize 50 railway stations. It has taken inspiration from the six privatized airports in India.

The railway station, which will be developed according to this model, will be totally under the authority of its investors. This complete freedom will ensure top-class services and excellent traveling experience for travelers.

Not only the railway station, but the government is also set to privatize the trains. For example, Tejas Express is semi-private, but the railway ministry has plans for the full privatization of individual railroads. The current priority is 150 trains currently on duty for the government. The idea of privatization of trains was proposed in a meeting with Union Railway Minister Piyush Goyal. According to the plan, the Indian Railways will purchase coachees, trains, Electric Multiple Units (EMU) from manufacturers, which are private instead of government manufacturers.

After the successful privatization of Airports and Railways, the government is going to focus on roads. Although, there are no official plans are into play for ways by the government.

Why privatization?

Whenever our government takes a decision, there is a big reason behind it; It may be the development of the city, citizens, the economy, or the country. The Indian Railways should be praised for its service to such a large economy; we have to take into account its privatization. With the privatization of the Indian Railways as talk of the town, we all need a clear idea as to why do we even need the involvement of a private body in a great monopoly such as Indian Railways, the largest railway network.

1. The coaches will be bought from a private manufacturer. This situation will create a tense environment in the government-owned facilities. This tension will put a strain on the department to leave behind the private sector in terms of quality of coaches
2. The privatization will also help in accommodating the latest technology in our coaches. Indian Railways will become a world-class network.
3. The quality of service in Indian Railways is sometimes questionable. The catering and punctuality are not the strongest pursuits of our railways. The system faces massive criticism when it comes to catering service.
4. The revenue generated by the Indian Railways is low and keeps the system always in losses. Indian Railways cannot have the same fate as Air India. Something has to be done before it collapses entirely.
5. Due to low-quality maintenance, the number of accidents increases during the rainy season. Slipping from rails, broken rails all become common during harsh seasons.
6. Government authority means it takes years to get new projects sanctioned. This delays the progress in the railway sector. Files, bills, funds have to be passed through several phases to get a simple project started.

The privatization of the Indian Railways will be an optimum solution to the issues mentioned above.

Advantages

1. Privatization will improve the infrastructure of the railway stations. It will also enhance the services for the travelers provided by the station. The cleanliness of the station is currently not at its best; we have broken bathrooms, stinking dustbins, which are not maintained regularly.
2. If the private sector gets involved in the railways, there will be rigorous competition among all the private players. This competition will help citizens of India in receiving quality experience during traveling.
3. The government increases the prices to counter the enormous losses of Indian Railways if the private sector is involved in the competition will keep the costs low and will make up for the losses of government.
4. The private party will be able to accommodate the latest technology in the station and the coaches of trains. The private sector will bring the pinch of modernization in our ages-old railway system.
5. Private participation will ensure high security and better monitoring of the stations. Also, rail management will be better.

Disadvantages

1. The railways face huge losses every year to provide affordable services to every citizen, The privatization of the government-owned Indian Railways can result in fare hikes, which will make daily travel for low-income groups impossible to afford.
2. With privatization, the primary focus of the private authority will be making money as it will be a business for them, not a duty. Hence, they will run more trains on high revenue-generating paths rather than in remote areas. This will severely affect the connectivity of the country. The metro cities will shine at the expense of the outlying regions. The remote areas will be more isolated.
3. The Indian Railways is so vast that even our government can not take care of everything, privatization would mean that a single party will be the authority of such an extensive network. It will be near impossible for any private body to handle Indian Railways in every corner of India. It will require a considerable staff, and monitoring of every region will be difficult. If different private bodies are assigned different areas, then there will be problems with communication and coordination. This will hinder the smooth running railways, which is in the service of every citizen 24×7.
4. The Indian Railways plays a vital role in goods services; it is the spine of India. It provides a low cost of transportation of goods and coal. The privatization of the system will affect the economy of India.

The total privatization of the system is impossible, and we cannot privatize only one part of the railways. Indian Railway is a vertical system, privatization of only one section is not possible at all. Right now Ministry of Railways handles all the working of the network.

Tejas express

Tejas Express is an experiment of the Indian government in the privatization of railways. The Tejas Express is a semi-private train that runs between Delhi and Lucknow. The Locomotive, driver, security is all in the hands of the government, but the services provided, fare prices, coach maintenance is under private contract. IRCTC will handle all these with its private partners.

The train covers a journey of 6 hours. The passengers are greeted while entering the train; there are stewards and hostesses to welcome and help the passengers. Three meals are served on the journey. The fare price of the trip is INR 1200-2300 approximately. There is INR 100 refund to all passengers in case of a 1-hour delay, and reimbursement of INR 250 in case of a 2-hour delay.

This is the first experiment of the government, which involves private bodies in the monopoly. The train is not private as the government still holds authority over it, but it is a big step, and its success will decide the future of Indian Railways.

Privatization of railways example: Britain

Let us take an example of the privatized railway system to get an idea about its effects. The United Kingdom has a private Rail system, which did not turn out to be a success. There is still immense dissatisfaction among the critiques of the decision. The trains are late; the fares are high, the performance is poor. While, the supporters of the decision argue that people are using the rails more than ever, which shows that it was a great decision to make. This argument is countered by several economists who have concluded that a low GDP, rise in fuel prices, unemployment, traffic has resulted in high use of railways instead of excellent services. This makes the high public use of railway argument invalid.

In a survey, it was observed that, in general, the citizens of the UK are satisfied with the privatization of the railways. Punctuality and the services were excellent at the start but deteriorated as time passed.

In the case of Japan, the privatization of the system turned out to be a huge success. Japan Railways is one of the finest systems in the world. They have world-class facilities, exceptional punctuality, and many other qualities. It is hard to tell whether the privatization of Indian Railways is a success or a loss, but now that we have all the facts, we can form an opinion.