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Will Liberalizing Indian Railways open New "Tracks" for its Citizens?

Jannat Shaikh

With 23 million travelers per day, the employer of 1.23 million citizens, and the 3rd largest railway system in the world, the Indian Railways which is a government entity under the Ministry of Railways is a major employer as well as one of the biggest public welfare bodies under Government Of India (GOI). In a recent landmark statement given by the government on 1st July, 2020, it is seeking to bring about major changes in the economy by allowing the private players to invest in and operate 151 private trains in 109 pairs of routes.

With the railways being one of the only three sectors under complete government monopoly, we can’t help but wonder about such an unprecedented judgment and its impact which is sure to ripple through the whole economic system. But, for every twist and turn in an idea, there is a story.

Why are railways going private?

To begin with, let's cogitate over why not? The other modes of travel, that is, the airways, roadways and waterways have been thriving hand in hand with private as well as public enterprises for decades. The Indian Airways opened its gate for private companies only in 1990, after the liberalisation of the economy and after decades of excellent service and efficient functioning, they hardly give us a reason to question that decision. Whenever a sector is privatised, we see improvements in service and consumer experiences, better technology, more competition, creation of job opportunities and more options for the consumers to choose from. Not to mention, the burden of the government is lessened!

As far as the real question is concerned, as to "why" the government is making this decision, it is because of the decreasing roles of railways as citizens are shifting to other modes of travelling. Just this reason has decreased railways' share in GDP by 4.5% (Byju's). Without expansion or renovation of the railways, its growth and contribution will steadily decline in the coming years.

However, it must also be noted that the Indian Railways are not opening all the doors for private investors. It is more of "liberalising" than "privatising". With this dual partnership, the GOI will allow only capable stakeholders after assessing on the basis of 'Request for Qualification' proposals for scrutiny of vendor capabilities and then allowing only the best of best to have a share in this enormous opportunity.

Is it going to have a negative impact?

Yes. Is it even a government policy if it doesn't have some highly regrettable flaws ?

"Private players have been given the freedom to fix fares in their own way," a statement given by the chairman of Railway Board, VK Yadav.

It is well known that private companies are profit-driven and not welfare-driven. We can already guess the difference between the governmental local trains and the posh air-conditioned privatised trains which will burn a hole in the pockets of train travelers, widening the gap between the common man and the rich-class of society. Secondly, the split responsibilities between the GOI and private players may create some havoc. The maintenance of the tracks and stations, safety and operation will still be under the Ministry of Railways. This dual control could lead to disputes, making the smooth road to functioning a bumpy ride.

Nonetheless, India is not alone. Many other nations have moved from nationalising their railways to privatising and vice versa. How did it go for them ?

In the United Kingdom, the railways were nationalized in 1914 during World War I, but returned to private owners in 1921. But they were again nationalized in 1948 and then privatized from 1994-97 as per provision of services under contract, where over 100 companies took over.

In the US, railways were nationalized in 1917 for World War II, but then the control was returned to private owners from 1920. When a few companies went bankrupt, the then President Richard Nixon established Amtrak which bought back some bankrupt railways and Conrail.

Japan had nationalized its railways in 1906 and by 1907, extremely limited private companies were allowed to run local and regional services. However, the privatisation of the National Railways of Japan started in 1980 and still continues to function under government and JR groups. And we have enough evidence from watching Japanese anime and movies that how beautiful and well maintained Japanese railways are.

But there are countries like Argentina, France and Ireland on the losing side of the court in this policy, and had to nationalise their railways back from privatisation. The example of these countries suggests that the privatization of railways is only possible to function smoothly if both the government and the private players coordinate in an instrumental manner. Yes, there will be numerous hurdles to pass but we can't help but be a little excited about this decision.

It is very humane to adjust to new situations as and when it is required, and to continue the daily hassle despite having some occasional (and sometimes, constant) complaints. For now, we can only anticipate what private companies are going to bring to the table and hope for the best, as we eagerly wait for things to get normal, to be able to board on to trains again and fight with all our might for that one corner window seat!

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