Is Privatisation Of Indian Railways A Viable Solution?

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The recent decision by the government to hand over 50 railway stations and 150 trains to private players is an indication that the government is moving towards the privatization of the most important public sector enterprise which has a role to play in everyone’s life. NITI Aayog CEO also called for the development of 50 world-class railway stations and recommended the encouragement of private efforts.

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Why Privatise Indian Railways?

Let us first look at the reasons for this sort of privatization of Indian railways. The reasons are numerous, but the most important of them are below:

  • Indian Railways as a public sector enterprise (PSE) is a regular loss-making body.
  • Basic amenities like cleanliness, ticket booking, etc. are in a poor state of affairs.
  • Modernization of railways has been lagging far behind.
  • The increasing number of rail accidents.
  • Punctuality of trains is also a big issue.
  • Bibek Debroy committee in its recommendations has also called for privatization in coaches and engine manufacturing.

Will Privatisation In Some Areas Solve All These Issues?

When Dedicated Freight Corridors will take away at least 70% of the freight trains, a lot of capacity will open up in the conventional network. To meet the huge demand for more trains without spending on investment, the motive behind these announcements is to get the private sector to share some of that burden. It will present a lucrative business proposition for the private players to enter the segment and invest for the longer term. Let us look at the benefits of privatization:

  • It would definitely help the railways come out of the vicious cycle of loss-making.
  • Ticketing and maintenance facilities will improve.
  • Basic amenities will improve.
  • It will lead to better management.
  • The number of rail accidents will reduce.
  • The burden of the government will reduce substantially.

But, Privatisation Has Demerits Too

Though there are certain benefits, there are negative aspects, like:

  • Railways is the lifeline of the country and privatization may lead to loss of jobs for many. In place of permanent jobs, casual jobs will increase.
  • Private players will be given a free hand in deciding the fares, then a huge section of the society will get affected.
  • Connectivity will get affected, as private players will offer services only when demand is high.
  • This may increase regional disparities.

The best way forward can be learning from the experiences of other nations. Britain’s privatization effort of its railways was a disaster, on the other hand, Japan’s was very successful. The latter boasts of some of the best and fastest trains in the world. In a country like India, public debate is necessary followed by a balanced approach.

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