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Private Participation: Passenger Trains

Did any one of us ever expect an Indian Railways train to compete with the luxury offered by an Etihad Airway flight? Could we have foreseen the ticket price of passenger trains and flights reaching competitive pricing?

The biggest public sector undertaking of the country, the Indian Railways has also been touched by the hands of privatization, leaving Defence and Atomic energy as the only two areas still exclusively reserved for the public sector. Although the privatization was strongly ruled out by the newly elected Prime Minister, Narendra Modi in 2014, NITI Aayog has now moved a draft document for discussion on private participation for running 150 passenger trains on select 100 routes, envisaging investments worth Rs. 22500 crores. This arrangement would place private trains under the bracket of Public-Private Partnership (PPP), as the tracks, signaling, stations and its infrastructure will remain under Indian Railways. The idea is to introduce more trains into the existing set, which means that the government will not give away its existing rolling stock to private players.

Tejas Express, a combined venture by Indian Railways Catering and Tourism Corporation (IRCTC) and a non-railway operator, is the first private train running on the Indian railway tracks. This train made a profit of 70 lakhs in the very first month of its operation. Indian Railways has consistently been running a loss for  the past few decades, and this first private train has broken the monotony with a whopping figure, which is the foremost objective of a private enterprise. The profits were predictable keeping in mind the ticket price which ranges from Rs. 1280 to approximately Rs. 2500 for a Delhi-Lucknow trip. Moreover, the two cities that it connects are all about the culture of extravagance, and travelling in a Tejas would be one of the many symbols of prestige and wealth.

However, if we look at it from the point of view of a rational consumer, would she spend such an exorbitant amount of money on a 7 hour long train journey when there is an availability of a quicker service in the form of flights at a similar price?

The private sector’s entry into railways has been profitable till now, but the prospects of expensive trains flourishing in the long run look poor. The answer to it lies in the original idea behind the introduction of railways as a means of transportation. It was to provide cheap transportation to a large number of people in a shorter time. The purpose was successfully resolved when the labour class used trains to travel to their workplace in the city every day.   Private trains cannot hope to serve this need of the masses in near future.  As far as the upper middle class or rich section of the society is concerned,they too would prefer a ₹ 1500 flight to a train journey that takes twice the amount of time. Thus, the general sentiment further elucidates that the introduction of private railways might not be as revolutionary as one might think.

From an economic perspective, there will be creation of some new employment opportunities. For example, Tejas provides its passengers with the services of a hostess, thus having hostesses on a land transport for the first time in India. Yet,it cannot be denied that there is a fear of loss of jobs in the government sector on account of the introduction of private trains. Statistically speaking, the introduction of 150 private trains is unlikely to upset the functioning of the humongous Indian railway apparatus that operates 13,542 passenger trains a day and carries 23 million passengers. Hence, private trains will account for just 1.1% of passenger trains a day. Indian Railways will definitely get a facelift with the deployment of 150 technically superior and faster train sets. Punctuality, in terms of arrival and departure will also see a major improvement.

On the brighter side, the discussion paper titled ‘Private Participation: Passenger Trains’ identifies 100 routes connecting various metropolitan and non-metropolitan cities and talks about how the economy can benefit from this part privatization of the Indian Railways. It will help in introducing modern technology in this sector and provide world class services to its passengers. This will also facilitate the use of locomotives with reduced maintenance.  And since the number of trains and frequency thereof will increase, the supply demand deficit can be effectively reduced.

Nevertheless, the long term plan of the government for this venture is unclear. Future goals that the government is trying to achieve through this change have not been talked about openly yet. Will this help restore the railway sector to its previous glory? Will Public-Private Partnership continue for Indian Railways the way it has  for National Highway Authority of India?Is this the first step to fully privatize the Indian Railways?  Only time will tell.

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1 Comment

  1. Aashna Malhotra

    Was looking for an article about this topic for research. Very helpful. Thanks

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