about 1 year ago
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When an old and aging man cannot run his huge mansion-like ancestral home, what would he first try and do? The most logical thing to do would be to sell the house and move into a smaller home and live the rest of his life on the balance money put in FDs. But if he cannot sell the house and wants it to remain as it, the next best solution is to rent it out – put out parts of the huge house on rent. This way, the old man retains control while the upkeep of the house happens at someone’s cost and he earns money too.

Now, that in short is what this great Indian Railways “privatization” is all about. To put it crudely, the Railways just does not have the money to modernize and expand and putting out some routes to the private players is the only way to get food on the table.  

Look at it from a ‘numbers’ perspective – Railways has planned on a Rs.50 lakh crore capex till 2030 and in the blink-and-it-will-go Railway Budgets, the allocations made just enough to cover its running costs, salaries, operating costs and this does not even help it clear the pension liability.

Even before Covid struck, the Railways was expected to end this fiscal with a deficit of over Rs.25,000 crore and now, with the trains not running, obviously the deficit would have ballooned to a shocking number.

What says it all is its Operating Ratio, which is at 120. This means that for earning every Rs.100, it spends Rs.120. Cleary, the Railways financial woes are immense. It recovers only around 57% of the cost through tickets and the balance is cross-subsidised through earnings from its freight operations. So, when there is no money to run its existing operations, where will the money come for modernization? Its like a dog chasing its own tail! 

And that’s why this plan of privatizing or rather, liberalizing.  The bids from the private players are for 151 trains – this is in no way, “handing it all to the private sector” as some are saying; it is just 5% of the 2800 Mail and Express services operated by Indian Railways. These trains will be on 109 busy routes through 12 clusters– those routes which have a huge waiting list and give the private sector an opportunity to earn.  The contract period is for f 35 years and to be executed by 2023.

Last week, there was news of 23 companies, the likes of Adani, Tata, Miami-based Norwegian Cruise Line, Alstom Transport, Bharat Forge, Sterlite Power, IRCTC, Essel group, GMR, Titagarh Wagons, Bombardier Transportation, BEML and L&T Infrastructure Development Projects expressing interest in bidding.

Well, experts are right in saying that these 151 trains will not in any way solve the financial woes of the Railways. But they are estimated to pour in around Rs.30,000 crore into the Railway system. Canada, Mexico, Japan, USA, Germany and Switzerland – all have completely privatized railways. UK is like India, in a PPP mode.

These trains will not be cheap as the aim is to enhance the travelling experience and get those travelling by planes to move to these luxurious trains. Yes, there will be further divide of class but then it already exists with Rajdhani and Tejas, doesn’t it? It will in no way be for the public good but for those who want good experiences.

It’s a good move and being just a fraction of the total rail network, its more like an experiment. We need to embrace changes like these to move ahead.

The Indian Railways remains a train wreck and its good that this ‘chain’ has been pulled – maybe we will stop at a station which will bring back the joy and romance of travelling in a train. Sip on a hot chai in a kullad and think about it…..

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