With the Railways formally kickstarting the process of inviting private entities to run passenger trains, it is expected to herald a new dawn for the struggling national transporter.
Rendered inept by bureaucratic and political dogmatism over the years, the organisation has failed to keep pace with the needs of a nation looking to take the next giant leap.
The current move, however, is expected to help it salvage its precarious financial state and boost its creaking infrastructure.
Bibek Debroy, who was the head of a committee formed by the government to lay out a roadmap for private participation, told Moneycontrol that running some private trains is only a very small part of the overall picture.
"A lot of attention has been focused on the private sector being allowed to run trains, without recognising that in several segments connected with the Indian Railways, privatisation in the sense of allowing private sector entry, has continuously happened since 2014, especially after the Debroy Committee’s recommendations were submitted in 2015. Most services on trains are already delivered by the private sector. The private sector already runs goods trains. So reforms of Indian Railways should not be looked at only from the narrow perspective of running a few passenger trains," Debroy said.
So, are the Centre's incremental steps to privatise Indian Railways a tad too late?
"I think the word 'privatisation' should be carefully used. It is sometimes interpreted as selling equity in existing public sector enterprises. This concept can also be applied to the Railways. But as in many other segments, the word 'privatisation' should really be interpreted as allowing private entry," he said.
Debroy feels that for changes to reflect on the ground, the operating structure of Indian Railways has to be reformed.
With private operators coming in, there's bound to be an increase in fares and passengers too would expect better facilities.
So, will Railways be able to wean away a certain section of airline passengers?
"I do not think there are any simple answers because the competition is not only with airlines but also with road transport. As a generalisation, and there are region-wise differences, in the immediate short-term, Railways will probably find it difficult to compete with road transport for distances less than 400 kms. Similarly, in the immediate short-term, Railways will find it difficult to compete with airlines for distances more than 1200 kms. But, I think, the Railways can target passengers in the segment of 400 to 1,200 kms," he said.
On concerns that the move will have a negative impact on the affordability and inclusivity Indian Railways offers, Debroy said it should not be a concern.
"The private trains offer competition and enable the Indian Railways to run train services more efficiently. This does not mean that there would not be other trains. It is a separate matter that Indian Railways fares have remained artificially low and need to be increased. Prices for any service cannot be across the board low for everyone. Subsidies need to be targetted towards those who need them," he said.
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