Indian Railways

By Roshni Rajiv*

Role of Private Players

Restructuring of the Indian Railway (IR) is a protracted process comprising of a series of actions. One of the desired actions put forth by the Committee is to introduce  private sector participation to operate both freight and passenger trains in competition with IR. This is to be achieved by creating two independent organizations within IR; one responsible for the railway infrastructure and another for operating trains.

As a feedback to this recommendation, the suggestion submitted to the Committee is that as on 2012-13, only 30 % of the total railway routes were connected by double/ multiple tracks. That implies approximately 70% of rail network are still connected by single railway track leading to a situation where one train has to halt for an approaching train to pass by, to proceed with its journey. This will hinder the efficiency of privately operated trains and may discourage private parties to come forward. In another scenario, the overall efficiency of train operation could also decline if a privately operated train running on schedule gets delayed due to a former IR operated train which is running behind its schedule.

One also cannot rule out the possibility that private parties would be keener to bid for operating trains in urbanised areas than rural areas; especially there would be some difficulty in attracting bids for the eastern and north eastern states due to internal security issues. There should be additional incentives to attract bids for operating trains in such areas.

An underlying criterion to attract private participation is to create an atmosphere of easy decision making and project execution with least interference, which is a possibility with each independent zonal company.

Role of State Governments

The Committee recommends to decentralize suburban passenger services from Indian Railways (IR) and to run it as Joint Ventures with State and/or local governments.

However, our submission to the Committee is that, instead of joint venture with State government, urban mass transport should be owned by State government. This is to avoid any interference from IR in administrating suburban services, which is a possibility in a joint venture. A Special Purpose Vehicle (SPV) should be set up with the State government to operate the suburban transportation. IR could lend its expertise and operational mechanism for a few years until the State/local governments form their own team to operate the services. Since the finance comes to the State level at a bigger volume compared to the past, the State government should decide the amount that is required for suburban transportation and this amount could be used to set up SPVs at the local level with the ownership of the State/Local governments.

Railway Insurance Cover

It may be a lesser known fact that Indian Railway (IR) runs 125 hospitals with 2,597 medical officers and 54,000 paramedical staff. The Indian Railway Medical Service (IRMS) is a jack of all trades administrating wide areas of services ranging from attending to railway accidents to conducting medical examination for railway employees to ensuring safe water supply at railway stations.  The Committee proposes to divest medical services which is a non-core function and seeks to facilitate the use of private hospitals in case of any railway accident or travel- related emergencies. For this purpose, the Committee suggests an interim measure to introduce an insurance surcharge on railway tickets.

The presence of zonal companies would raise the competition in insurance market. The zonal companies could compete with each other regarding how much insurance each pays for accidents, theft, death and such. Higher quality of services would attract more investments to the respective zonal companies. Insurance could be an ideal benchmark for the rating of zonal companies.


Railway Station Development


Budget Speech 2015-16 proposed to revamp station development policy completely and to simplify processes for faster redevelopment by inviting interested parties. The Indian Railway Stations Development Corporation (IRSDC) was set up in 2012 for station development. Last year, 596.53 hectares of vacant railway land was entrusted to Railway Land Development Authority (RLDA) for commercial development. The Committee has proposed the need for some rationalization between the intentions of the Budget Speech and the work of IRSDC and RLDA.

In response to this Committee recommendation, our submission was that the development requirements of each station vary depending upon the passenger traffic, train traffic and strength of railway staff. Moreover, zonal railway would be a better judge of its divisional development requirements. Besides working with IRSDC, a zonal company could also invite private parties for optimization of land and air space, similar to airport development in metros.

Over and above, two or more zonal companies could work together to develop rail infrastructure like high speed rail corridor. Establishing State-of–the-Art railway technologies would be the solution to improvise railway experience for passengers by reducing the travel time and providing a comfortable and safe travel.

The prevailing operating condition of Indian Railways through its 17 zones and 68 divisions is a pertinent illustration of the idiom, ‘too many cooks spoil the broth’. Railway restructuring is a long-drawn-out process and there are no overnight miracles. As per study, every country has taken at least 10 years for successful railway restructuring. Whereas in India, last three decades have merely seen several railway committees submitting policy reports for transforming railway. Alas! All have just gathered dust. The Gordian knot lies in the implementation of these policy reports. There is still a long way to go before Indian Railway could be referred as world class transportation. Let’s be optimistic that final report of Bibek Debroy Committee is the one to cut this knot.

*The author is a Non Resident Research Associate with Centre for Public Policy Research, Kochi. Views expressed here are personal  and does not reflect or anyways represent the views of Centre for Public Policy Research.

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