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Indian Railways Privitization Plans Must Be Opposed

By Anuj Wankhede

29 January, 2014

The Indian Railways (IR) has one of the largest rail networks in the world (63,000 route kilometers) , it is the largest employer in the country at 13 lakh people and is the 6 th largest employer in the world. It transports a minimum 3 million people daily on its route and runs passenger, freight and multi modal transport services throughout the country.


And I am personally a great fan of this great service – nay, it is an institution -and which I always use as my preferred mode of travel all throughout the country.

It is also claims to be a fund starved entity due to carrying passengers and hence has been swiftly increasing passenger fares to make a higher profit so that foreign investors will buy a stake in the organization. This infusion of Foreign Direct Investment (FDI) could be to the tune of 100% stake in IR and is tantamount to the privatization of the rail network in India.

I agree that a fund starved enterprise cannot afford to spend on better services and amenities. That is a no-brainer.

But abdication of its duties and responsibilities as a public service by the government cannot be tolerated too. It pains to hear of such news when it will affect billions who travel on the Indian Railway network each year. Not only will privatization increase the fares (capitalism is another term for profit maximization - at any cost) it will also render many people jobless in the railways. All this does not bode well for it and the government should not repeat its mistakes again and again by trying to have FDI in the railways.

The Indian Railways strike of 1974 is a saga of heroism of ordinary railway workers and their families who dared  to stand up against the might of the Indian state. It is the most widespread revolt by the working class in independent India and the biggest strike in the history of Indian Railway. How many of us know about this heroic story of the ordinary railwaymen resisting terror unleashed by the Indira Gandhi regime?

A few news items in the past couple of days have indicated that the IR plans to have “premium pricing” ticketing for special trains on 37 busy routes. The fares are astounding to say the least.

Business Standard reported that railway tickets for air-conditioned (AC) travel on the Delhi-Mumbai route, where it operated a premium train service to connect the two cities during the Christmas-New Year holiday season last year sold one-way AC Tier-III tickets at up to Rs 12,000 apiece and AC Tier-II ones at up to Rs 17,000 - six to seven times higher than the ordinary   Rajdhani Express   fare on this route.

While that may sound good for the moneyed traveler who does not prefer to fly, the experiment has boosted IR's morale to introduce such “premium” trains on 37 routes across the country!!

Another news item says that the Rail Tariff Authority (RTA) has been approved by the cabinet and will now “advise” (compulsorily) the Rail Ministry about fare (hikes) effectively giving the government a cushion to hide behind and say that the fare hikes are as “recommended” by the RTA. This will leave the government and the railway minister to adjust fares – and do not be surprised if they are always adjusted upwards.

IR is a crowning jewel with the Indian governments' chest. However, the government has always washed its hands off in supporting this huge national infrastructure and its staff upon which millions of common people depend each day.

If the government wants to kill an institution like Indian Railways, these above steps will definitely but unfortunately succeed. One needs to look at the fate of British Rail after it was privatized during the Margaret Thatcher / John Major regime. Services dipped as staff were made redundant and even till date the punctuality and reliability of services at British Rail have not improved despite two decades of privatization. Fares have been “rationalized” (a euphism for “increased”) ever since but the service does not deliver on its privatization promises.

India too has partially privatized many wings of the Indian Railways such as IRCON (construction), CONCOR (container opertaions), RITES (technical services). These are all Indian profit making entities and have in fact offered to fund the parent body viz. Indian Railways at very favorable terms. However the government seems in no mood to accept domestic funding and remains adamant on asking for foreign funds. Many foreign governments and companies are coming forward to pick up this huge business opportunity with Japan being the favored “partner” for the government.


The experiment with “Tatkal booking” (24 hours prior to departure of trains) has given the IR huge amounts of profits over the years and perhaps emboldened by this, they are experimenting with setting up the RTA and introducing premium trains where tickets are exorbitantly priced. The very fact that the railways managed to sell so many seats shows that there is a huge latent demand even from ordinary passengers too. But will the railways care for these people?

The logic used by the government or the Rail Ministry is flawed. Most people choose to travel by trains because it is much cheaper and faster than roads. For example a ticket by a private bus costs about Rs. 250 while a train ticket costs only Rs. 50 in most parts of India. Does this mean that the IR should price train tickets at par with private bus tickets? Has the government completely lost its social, moral and ethical sense of duty and wants to sell off or privatize all its responsibilities towards the poor passengers who travel daily for work and cannot afford any other means of transport? Ask an ordinary farm laborer about his choice trains and he will point to the cheapest passenger train. When a large population of India cannot afford even a express train ticket, what is the point of starting such elitist super premium trains?

Already, by handing over road “development” to private contractors who collect huge (and often illegal) toll on the highways, the government has made road transport completely out of bounds for the poor. Now, by trying to raise passenger fares and also by making money on the “Tatkal” and dynamically priced “premium” express services, the government wants revenue at any cost. People are damned eitherways, but does the government care?

The fault with the governments' logic is simple if one understands a few basic facts about rail operations.

Globally, railways (including the IR) work on the principle of Line Capacity (LC) - and more specifically to Practical Line Capacity and Economic Line Capacity. This means that the railways have to plan and schedule movement of trains according to the available capacity of a particular section within any 24 hour period. They need to make these decisions based on the practicality and economics of running trains on a particular section.

This is fair logic.

What goes wrong is the ideas that for IR, ONLY economic line condition apply to trains while dismissing the fact that it is indeed Practical to offer more services to ordinary passengers.

Whenever the poor or those from the hinterland ask for more train services, the usual reply is that of “track saturation” (no more slots to run trains) or “lack of rolling stock” (locomotives, rakes, coaches etc.) How has the Railways suddenly found space for these super premium trains on its tracks? How have they suddenly procured rolling stock which is unavailable to the poor?

Premium trains such as the Rajdhanis and Shatabdis anyway get highest priority while ordinary trains are made to idle at side lines for long time. All this will worsen if such premium trains are introduced in huge numbers across the country. In fact on many routes, freight trains receive higher priority than ordinary passenger and express trains and halted for long time to allow a freighter to pass by or cross lines. By the ministry of rails own estimation, freight provides profitable revenue while passenger fares are subsidized. So what? The list will be long if one starts from food to defense to water that are the basic responsibilies of a responsible government. Transport is one such responsibility – especially in a country where most people cannot afford any alternative means of travelling long distances. Increasing freight rates is far more practical but will not be palatable for the industrialists and hence the common man must pay.

And all this comes at the cost of the common man who cannot even afford to pay for a “Tatkaal” booking surcharge and has to travel in conditions worse than even cattle are transported. While there are laws on the number of cattle which can be transported in a vehicle, no such laws exist for millions of human travelers on the trains. Yet people have accepted it as fait accompli and choose trains.

Also, when there is available Line Capacity for these new special premium trains, then why does IR not increase the frequency of its weekly and bi-weekly trains and convert them into daily services between major cities? The waiting list of passengers on the Delhi-Mumbai section for example is often over 300 passengers even one month prior to travel dates – and this is during non-peak, non-holiday season!!

By artificially creating a huge demand for instant “tatkaal” tickets, IR is already raking in huge amounts of money. This “Tatkaal” blackmailing by the railways has been going on for a number of years now and is now the sole option to get a confirmed train reservation – at a price. Incidentally, most seats reserved under the tatkaal quota actually go empty and are sold by the travelling ticket examiners (TTE's) in connivance with touts and railway staff / agents at a premium once the train departs. This just goes to show that ordinary people simply wishe to travel from point A to point B at the most reasonable cost in fairly decent travel conditions without having to bear the burden of such hidden costs which are being practically forced upon them by the IR.

With these latest moves, the government and the railways are simply trying to maximize profits at ANY cost and are almost beckoning the poorest of poor to remain in the era of horses and bullock carts while laying the red carpet for the elite and foreign investors who are salivating at the prospect of milking the billions of people daily for their own profits

These moves will backfire on the government which is abdicating its social role in all sectors one after another and is now eyeing its biggest possible cash cow – The Indian Railways.

(Photos courtesy Reuters)

The author is an avid and seasoned traveler on all modes of transport in India but is a IR fan. Views expressed are his personal views. He can be reached on [email protected]




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