Indian Railways: Opening the Door for Private Players
Indian Railways recently announced that it will open up the train operations to private entities on 109 origin destination pairs of routes using 151 modern trains. Request for Qualifications (RFQ) proposals have been invited for scrutiny of vendor capabilities, from those who can bring modern trains for operations on existing rail infrastructure.
• In 2015, the panel chaired by BibekDebroy recommended that the way forward for the railways was “liberalisation and not privatisation” in order to allow entry of new operators “to encourage growth and improve services.”
• It was estimated in Economic Surveys that a one rupee push in the railway sector would have a forward linkage effect of increasing output in other sectors by ₹2.50. The Debroy committee found this significant to take the ‘Make in India’ objective forward.
• It also made it clear that a regulatory mechanism was a prerequisite to promote healthy competition and protect the interests of all stakeholders.
This is the first initiative of private investment for running passenger trains over the Indian Railways network and will attract investments of about ₹30,000 crores.
The present move takes another step towards competing passenger train operations, bringing new-generation trains and attracting investments
It began with the Indian Railway Catering and Tourism Corporation (IRCTC), a public sector undertaking, introducing the Lucknow-Delhi Tejas Express, in 2019. The Tejas were the first trains allowed to run by a ‘non-railway’ operator.
These trains will be operated by drivers and guards of the Indian Railways.
The Railways said “majority” of trains will be manufactured in India and the private entity will be responsible for financing, procuring, operation and maintenance of the trains, which will be designed for a maximum speed of 160 kmph.
For the project, the routes are divided into 12 clusters based out of major city centres, such as Patna, Secundrabad, Bengaluru, Jaipur, Prayagraj, Howrah, Chennai, Chandigarh, and two each for Delhi and Mumbai.
Private entities will only run 5 per cent of the trains while the 95 per cent, with the same ticket fares, will be run by the Railways. The Railways is expecting that the private train operations will begin by April 2023.
The objective of the initiative is to:
a) introduce modern technology rolling stock
b) reduce maintenance
c) reduce transit time
d) boost job creation
e) provide enhanced safety
f) provide world class travel experience to passengers
g) reduce demand supply deficit in the passenger transportation sector
Under recent move
The operation of the trains by the private entity shall conform to the key performance indicators like punctuality, reliability, upkeep of trains, etc.
Operation and maintenance of the passenger trains would be governed by standards & specifications and requirements specified by Indian Railways.
Sponsorship with suitable branding of trains/stations and use of CSR for cleaning activity may be explored for resultant savings in expenditure.
If NGOs want to adopt stations for cleaning activity, it may be permitted by Divisional Railway Managers with the condition that it should result in savings.
From a passenger perspective, there is a need for more train services, particularly between big cities.
Train services operated by Indian Railways cover several classes of passengers, meeting the social service obligation to connect remote locations, and adopting the philosophy of cross-subsidy for passengers in low-cost trains through higher freight tariffs. In more recent years, it has focused on revenue generation through dynamic demand-based pricing.
The aim should always need to be ensure better service delivery as well as a better way to finance railways social obligations.