Should Indian Railways Be Privatised Flashcards
Railways is the backbone of the country and a most important means for the common people. Thousands of people commute from their native place to their work place on daily basis. Agricultural products could reach the remotest corners of the country only because of low cost railways.
* Keeping in view the dependence of the common people on railways, the idea of complete privatization cannot be considered because private players are driven by profit motive which will not be favorable for the people. Therefore private participation can be the key for increasing efficiency rather than privatization.*
Debroy committee ( which was set up to suggest ways to mobilise resources for the Indian Railways and restructure the Railway Board) has looked at the railway restructuring experiences from multiple countries, including Japan, the United Kingdom, Germany, Sweden, Australia and USA.
***The report says that key lesson which can be learned from UK is to retain the rail-track and infrastructure as a publicly-owned monopoly, while opening up rolling stock operations (wagons, coaches, locomotives etc.) for passengers and freight to the private sector.
The report further says that in these countries, which opened up to competition, the entry of competitors lowered prices and led to better services.
Therefore, the Indian railways can be separated into two organizations- one responsible for the track and infrastructure; and another that will operate trains under private hands.
Currently the problem is that there is no competition as both maintaining the infrastructure and running the operations are done by the government. Segregation of functions with private participation will increase the competition thereby increasing the efficiency. It will also be profitable for govt. as the government would charge the operator.
Further Indian Railways is locked into non-core segments such as running hospitals and schools for its employees. Handing over of these institutions to private players through a transparent bidding process could significantly cut costs.
