By inviting a request for qualification (RFQ) from private parties to run 151 trains on 109 routes, the government has taken the first step towards the privatisation of Indian Railways. This follows its earlier decision on strategic disinvestment of the Navratnas, the Container Corporation of India Ltd (CONCOR), to bring down its stake to 24% in the marquee hauler, a move that raises concerns about the emergence of private monopoly in the container movement sphere.
The present scheme postulates that the selected concessionaires will use the government railway tracks and other infrastructure, but operate the trains entirely on their own with personal crew, ticket examiners, train superintendents and guards. They will have the right to collect market-linked fare without any binding about the class composition and halts of their trains. Though the private operator will pay the haulage charges and any other payment as specified in the agreement, the arrangement will constrain own use of important infrastructure like washing lines and maintenance depots of the Railways.
Grant of a head start of 15 minutes to private trains against other trains running on the same route will adversely impact the Railways. This will help private trains attract all the traffic en route, like what we see in the case of private bus operators vis-a-vis state transport buses.
The core function of the Railways is to drive trains. The Railways is the veritable lifeline of the nation. Governments in the past preserved its character and role as a national transporter at an affordable cost. With a route length of 67,638 km — 1.5 times the circumference of the globe — and 1,23,542 km of total track length as of March 2019, the Railways crisscrosses the Indian landscape with 2.26 crore people travelling daily from 7,349 stations besides freight trains transporting goods over 3.2 million tonnes.
As if preparing to discard the sanctity of its core function, the government increased the capital outlay for 2020-21 only by Rs 5,000 crore — to Rs 1.61 lakh crore over last year’s Rs 1.56 lakh crore. Similarly, budgetary support this year saw an increase only of 0.05% to Rs 70,000 crore from Rs 69,967 crore last year.
The Railways does require huge funds for upgrade and modernisation. The way forward is to generate resources, not to abdicate the responsibility of efficient running of the system. It conveys a sense of defeatism when the Railway Ministry says the objective is to introduce, inter alia, modern technology rolling stock with reduced maintenance, reduce transit time and provide enhanced safety and world-class travel experience. This ought to be the remit for the entire network.
Outsourcing of non-core functions like civil works, onboard catering, housekeeping and supply of components to rail coach factories has always been a normal practice. Private investment under the PPP model can be profitably sought in building world class stations, redevelopment of other stations with multi-functional complexes, state-of-the-art base kitchens for hygienic preparation of wholesome food, freight terminals, multi-modal logistics parks, expansion of optical fibre cable network, port connectivity projects etc. This will, without compromising the core functions, drastically reduce the need for injecting public funds in many projects.
The UPA government had explored ways to attract private investment in this fashion. Two projects worked out related to five participative models for rail connectivity to ports, mines and major industrial hubs and building freight terminals, where the private party would buy land and share 50% of the terminal charges.
Under the first model, the partnering party would buy land and build the track but the operations would be solely by the Railways with the former getting payback of investment through freight apportionment. Other proposals related to high-speed corridors, dedicated freight corridors and multi-modal logistic parks. On the contrary, the present plan is to privatise the running of trains per se. This, in course of time, will usher in privatisation of other vital operational functions, including security on trains.
The need today is to improve efficiency. Operating Ratio (OR), which denotes the amount spent to earn Rs 100, is an important parameter to gauge performance or health of railway finances. In 2019-20, it shot up to an unsustainable level of 97.46% against the earlier estimate of 95%. The remedy lies not in handing over the operation to private parties but to devise means to augment efficiency and revenue. Presently, there is no well-laid roadmap in sight to boost earnings or effect savings.
Expansion of parcel services and advertising on trains, stations, CCTVs, tickets and catering material etc has immense potential and calls for aggressive marketing. Given its vast network, including over 2,40,000 freight wagons and over 60,000 passenger coaches, besides the infrastructure of 7,349 stations and 1.07 lakh acres of land, many avenues of income remain untapped or unexploited. The Anil Kakodkar Committee on Safety and the Sam Pitroda Committee on Modernisation noted the immense potential of earning handsome amount from surplus land at the stations.
The freight segment has scope for expansion to achieve at least 50% share of the total freight movement in the country. Carriage by rail is cost-effective and six to 10 times more efficient than road transport. One rake of 59 open wagons carries 4,022 tonnes of freight and that of 43 covered wagons carries 2,870 tonnes. This is equal to the load carried by 402 and 287 trucks, respectively. With long loops that can hold 1.5 km-long trains, a goods train can carry more than 10,000 tonnes of freight. Commissioning of two 3,342 km-long dedicated freight corridors, a project initiated by Dr Manmohan Singh, will speed up the movement of freight, freeing main lines for more passenger traffic.
Scrap worth crores lies in stores, depots, workshops, at stations and along the tracks. A concerted effort to clear it can rake in funds and also clean up cluttered railway spaces. Another source of revenue can be giving temporary possession of land, on licence basis, of the adjoining 67,638 km of tracks, to cultivators or landless farmers. This will generate income as also green the stretch on both sides of railway tracks. Station buildings can be uses to set up small solar plants to meet local needs.
Modernisation calls for a mission mode. For this, privatisation of operations is not the answer. It is tantamount to turning the PPP model upside down, using ‘public goods for private good’.
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