INTRODUCTION
Indian Railways plays an integral role in the country’s transportation. It is the world’s fourth largest rail network- with a spread of over 64,000 kms, transporting about 23 millions of people daily by its 13,000 passenger trains. It is one of the world’s largest employers with workforce of about 1.3 million. It also has a significant contribution to the Indian Economy through Foreign Direct Investment (FDI).
However, with the railway networks developing rapidly across the world, Indian Railways is facing problems due to lack of investment and infrastructure. The 166 years old institution functions as a subsidized mode of transportation. Indian Railways recovers only 57% of the cost of travel and the remaining is used as subsidy. This is Cross-Subsidization i.e. Money earned through freight trains is diverted to subsidize passenger revenue, and thus the development of freight traffic infrastructure suffers.
It becomes quite difficult to manage the expenditure of workforce and variable cost incurred under the constrained budget. Private Investment play a crucial role at this point of time. Private Institutions can contribute by dividing the responsibilities, upgrading the facilities and infrastructure and promoting the development. However, before giving it in private hands, it is important to analyze whether privatization of such a large public institution will bring about desired outcomes or not.
In 2015, a committee was constituted under the chairmanship of then Niti Aayog member Bibek Debroy to prepare a report for mobilization of resources and reconstitution of the Union Railway Ministry and Railway Board and also give suggestions for a complete overhaul of Indian Railways.
The Debroy Committee gave its recommendations and favored privatization of rolling stock: wagons and coaches. The committee stated that the Indian Railways was no longer being recognized as a monopoly and also faced tough competition from the road transportation sector. It pointed out, “The cross-subsidization of low passenger fares by artificially high freight rates has led to a shift in favor of road transport, for both freight as well as short distance passenger traffic. It needs to be recognized that most passengers are willing to pay higher fares, albeit only if accompanied by enhanced services.”
The committee preferred liberalization over privatization as a better option to encourage the entry of new operators and improve the services and infrastructure by providing a healthy competition. This would prove as a regulatory mechanism and also protect the interests of stakeholders. It further noted: “It needs to be understood that this Committee does not recommend privatization of Indian Railways. It does, however endorse private entry, which is not ab initio but ab hine - as this is already part of the accepted Indian Railways policy - with the proviso of an independent regulator.”
ADVANTAGES OF PRIVATIZATION OF RAILWAYS
· Improved Infrastructure- Privatization will lead to betterment of infrastructure which in turn will lead to better services and amenities for passengers. Indian Railways is often criticized for its unhygienic and stinking washrooms, lack of water supply and dirty platforms. By privatization, it is expected that a private institution will ensure better amenities.
· Balancing Quality of Service with High Fares – The most common complaint by the passengers about Indian Railways is that the quality of services provided do not par to the high charges paid by them. Privatization can solve this problem by providing healthy competition. When private companies will enter the sector, it will foster competition and hence result into betterment of the quality of services offered.
· Lesser Accidents– Any train-related mishappening is scary for both the passengers and the concerned authorities alike because of the physical, mental and financial loss that follows. As private ownership is seen as synonymous of better maintenance, protagonists of privatization are of view that it will minimize the number of accidents and ensure safe travel and higher monetary savings in the long run.
· Better Technological Innovation- Indian Railways follow traditional aspect in terms of technology, services and overall development. Entry of Private institutions can lead to new inventions in technology, infusion of modern technology with traditional one and increase in capacity building of the institution.
CONCLUSION
Privatization of Indian Railways will require a new institutional mechanism in which the infrastructure can remain as a Government's monopoly while a market of service providers can be instilled. Modernization of the railways is the need of the hour to adapt the changing and growing needs of the modern world. It can lead to reimbursement of the social costs speedily and facilities are upgraded timely.
The core Railways can be liberalized rather than privatized. The Survey of American Aviation Sector can be taken into consideration that privatization may not be the answer to solve problems related to the Indian Railways. It would be better to find a balanced solution that can incorporate the advantages of both the private enterprises and government monopoly.
REFERENCES
· https://www.drishtiias.com/daily-updates/daily-news-editorials/privatisation-of-indian-railways