|Demand of the question
Introduction. Contextual introduction.
Body. Discuss the need and significance of the railway reforms. Mention various benefits of privatisation in railways and related concerns.
Conclusion. Way forward.
Indian Railways (IR) has the 4th longest rail network in the world. It is a network of 70,000 km and runs about 21,000 trains, carrying 23 million passengers and 3 million tonnes of freight per day. Government has set a vision of making railways a 100% safe, fast and reliable mode of transport for passengers and freight. The plan is to modernise the entire network. The recent step of creating an Indian Railway Management Service will help in this objective.
Need and significance of the railway reforms:
- Economic development: Reforms are needed in IR to ensure that it meets the requirements of a soon-to-be $5 trillion economy. To contribute comprehensively in Indian development IR needs administrative reforms, to improve services and efficiency and engineering reforms, to improve cost and environmental effectiveness.
- Departmentalism: The Railway Board is IR’s apex decision-making body. It is organised into various departments like mechanical, electrical, traffic and finance that are vertically separated from the top to bottom. These lines of separation made IR a complex over-departmentalised organisation with inefficient decision-making. Recent reforms of IR restructuring involving unification of existing Group A services into an Indian Railway Management Service (IRMS) and reorganisation of the Railway Board is a right step.
- Administrative reforms: The management organization needs to be radically simplified. The Debroy committee’s recommendation to separate the core functions (rail operations) of IR from the non-core (medical, schools, protection force, etc.) makes eminent sense. The Debroy committee also recommends a revised governance structure that is empowered to make decisions and create some distance from the government.
- Modernisation: Indian Railways has not been able to keep pace with modernisation of infrastructure and services and has not been able to expand at the pace that India needs. Almost all arms of the railways require modernisation of equipment, processes and training, all of which are still continuing as they have been, through the decades. The result is that the railways continue to be a drain on the exchequer, while continuing to provide vital services inefficiently.
- Safety: In India rail accidents are high. In 2018-19, railways recorded 16 deaths, 28 deaths in 2017-2018 and 195 deaths during 2016-2017. The Kakodkar committee had suggested investing Rs 1 lakh crore over a 5-year period and the creation of a statutory railway safety authority.
Advantages of increased private players in railways:
- Monetisation: Railways owns large tracts of land along its tracks, in various parts of the country and this can be optimally monetised by inviting private players to invest, build and manage properties that may be developed on these lands.
- Enhanced infrastructure: One of the strongest arguments in support of the privatisation is better infrastructure. It will give an end to some of the serious problems like poor sanitation, poor quality of food, safekeeping around stations, etc.
- Maintenance: Private ownership is synonymous with better maintenance, thus it will reduce the number of accidents, resulting in safe travel and higher monetary savings in the long run.
- Increased efficiency: The main argument for privatisation is that private companies have a profit incentive to cut costs and be more efficient. A private firm is interested in making a profit, and so it is more likely to cut costs and be efficient. It is argued that a private firm has pressure from shareholders to perform efficiently. If the firm is inefficient then the firm could be subject to a takeover. A state-owned firm doesn’t have this pressure and so it is easier for them to be inefficient.
- Less political interference:With the presence of private investors in Indian Railways, there would be less political In the current scenario, the majority of public-sector enterprises in India are working under political pressure.
- Hike in ticket fare: With privatisation, there would be a hike in the ticket prices as private operators would seek to earn maximum profit. The poor sections of society will not be able to afford the ticket prices of trains.
- Social cost:Indian Railways provide special concessions to women, old, disabled, defence etc. If railways get privatised then there might be a possibility that such concessions will not be given to the people.
- Accessibility:Indian Railways connects even the remotest parts of India. It is making constant efforts to make it accessible to remote places. In case, railways will be run by private operators then there are chances that it will not be running in the remote areas as it will generate less profit from such areas.
Global experience in privatising railways services has been mixed. So it is essential to tread with caution. Bibek Debroy committee has suggested privatisation of some operations in Indian railways. In order to keep Indian Railways affordable for the lower strata of the society (post privatisation), the government must offer subsidies and tax incentives to companies that would provide low cost services, similar to low cost airlines, to these very pockets of population. This in the long run would make the railway network more efficient and affordable.