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