Big reforms to put Indian Railways on right track

Necessity is the mother of all inventions. A cash-strapped Indian Railways has hit upon a novel idea that could not only change train travel experience for good but also give a leg-up to the wobbly finances of the national transporter.

In consultation with the NITI Aayog, the government’s policy think-tank, the railway ministry has picked 100 routes to run 150 private passenger trains and bids for the routes are likely to be invited soon.

According to a recent Economic Times report, the finance ministry’s Public Private Partnership Appraisal Committee had given an in-principle nod to the proposal last month, paving the way for the railways to roll out its reform in engaging private operators and ending its long monopoly in running passenger trains.

What’s the railway logic for this transformational privatisation push? According to the information memorandum put up on the NITI Aayog website, the reserved passenger volume during 2018-19 was 16 per cent (0.59 billion) of the total originating non-suburban passengers (3.65 billion). Almost 8.85 crore of wait-listed passengers could not be accommodated.

“There is, hence, a critical requirement to introduce private operations in passenger train which will allow introduction of next generation technology and provision of higher service quality, ensuring use of improved coach technology and reduced journey time. In this direction, the authority (railways) has decided to permit private entities to undertake passenger trains operations,” the memorandum says.

The railways’ experimentation with “private” participation in running of trains started last year when it allowed its subsidiary — the Indian Railway Catering and Tourism Corporation (IRCTC) — to run the Tejas Express on the Lucknow-Delhi route. According to a media report, the train posted a profit of Rs 70 lakh in its first month of operation and had run with an average occupancy of 80-85 per cent since it began operations on October 5. Perhaps, the success of Tejas has encouraged the railway ministry to expand the private train network in a big way.

According to the plan, domestic as well as global players, with experience in railway and tourism sectors, will be allowed to bid for the routes on a revenue-sharing basis. The Niti Aayog and the Indian Railways envisage an investment of ₹22,500 crore. The 100 routes that have been identified include some of the prominent ones such as Mumbai Central-New Delhi, New Delhi-Patna, Allahabad-Pune, Dadar-Vadodara, Howrah-Chennai, Howrah-Patna, Indore-Okhla, Lucknow-Jammu Tawi, Chennai-Okhla, Anand Vihar-Bhagalpur, Secunderabad-Guwahati and Howrah-Anand Vihar.

The 100 routes have been split into 10-12 clusters. According to the plan, the private operator will have the right to collect market-linked fares and will be provided flexibility of class composition and halts. They will also be able to use the rail infrastructure on payment of haulage charges.

The privatisation of train operation, the NITI Aayog memorandum said, would help in introducing modern technology and rolling stocks with reduced maintenance. Besides, it would provide world-class service experience to passengers and help in reducing the supply-demand deficit.

At a time when the railways is spending more than what it earns (the operating ratio for the first six months of the current financial year was 121 per cent against 113 per cent during the same period in 2018-19) and finding it extremely difficult to tweak passenger fares (it could effect a very nominal hike in passenger fare at the beginning of this year and that too after five years), the move to allow private players to run trains is definitely a prudent step.

However, one thing should be kept in mind to make this move a real success. While private operators will have the flexibility in fixing fares, recruiting staff and providing passenger amenities, the actual running of the train will have to be done in close coordination with the Indian Railways since the rail track and signalling system are owned and run by the national transporter. While the Tejas Express is a success, it must be kept in mind that for IRCTC, it may have been easier to coordinate the train running operations as it is a subsidiary of the railways. For a complete outsider, the coordination may take time to play out and there could be teething problems that will have to be deftly handled by the railways.

It is beyond doubt that a swanky speedy train on time along with revamped rail stations — the railway ministry has already taken the initiative to re-develop 400 stations on a public-private partnership model — can truly transform train travel in the country.

Going by the recent steps, it seems Indian Railways is pulling out all the stops to put the national transporter on the right track. For example, very recently, it had decided to rejig the Railway Board through the merger of its existing eight Group A services into a central service called the Indian Railway Management Service. Such a move is expected to bring about the much-needed organisational focus, agility, do away with the needless departmentalism and discourage the culture of working in silos. If the challenges to such organisational revamp are adequately addressed, this will  indeed make the Railway Board a more effective set-up.

It is obvious that the introduction of private trains, revamped rail stations along with the government’s move to restructure the Railway Board will have long-term benefits for the national transporter.