Privatization of Indian Railways

Privatization of Indian Railways

Considering the network size of 120,000km, Indian Railway is the fourth largest railway in the world. With more than 20,000 trains actively operating from around 7,349 railway stations – with 23 million passengers and 3 million tonnes of freight round the clock a day – it is the nerve of the Indian economy. In 1853 railways were introduced by Britishers in India, and after independence from Britain’s rule in 1951 Indian railways were nationalized and started to operate under the Ministry of Railways, according to the government. Indian Railway is also considered one of the largest public sector companies, employing over 1.3 million people.

Indian railways have had a crucial role in the independence of the nation and evolution of modern India from a scattered British colonial tiny kingdoms and provinces, their contribution in the economic development, logistics, agriculture were important. Nowadays, operational loss and competition from alternative and more convenient ways of transportation are affecting Indian railways, unlike other major networks in the world, lack of punctuality, operating speed, cleanliness and sanitation, and political pressures made the operation of Indian railways burdensome. Understanding the importance of railways in India, the Government started the propitiation of the system in the nation. In recent years they have increased the speed of gauge conversion, started electrification, introduced high-speed trains and gained more interest in sanitation. The most interesting move made by railway was the initiative of the privatization of trains. Amidst opposition from socialists and communists, Indian railways gave a green signal to the privatization of trains.

IRCTC, Indian Railway Catering and Tourism Corporation, is a subsidiary of the Indian railway with 87.40% share held by the government, which got the first opportunity to run the first private train in the nation. On 4th October 2019 in the route from Lucknow to Delhi, they ran the first private train, named “TEJAS,” which had a different fee structure that was more costly than normal tickets and compartments with luxury features like train hostesses, CCTV cameras, automatic doors, and cleaner and well-maintained interiors and toilets. Punctual, on-time trains and more luxurious comfort attracted many passengers right after its launch. As the maiden attempt was a huge success IRCTC started the second train on the route Ahmedabad to Mumbai on 19th January 2020. The success of the two routes gave confidence to IRCTC and they decided to operate the third train between Hindu pilgrimages between Indore and Varanasi named “Mahakaal”, which is scheduled to start operating from 20th February 2020.

In the latest budget, Finance Minister Nirmala Seetharaman announced that Indian Railway had decided to promote privatization policy and to privatize 100 rail routes for the introduction of 150 private trains across India. According to LiveMint, more than two dozen global firms including Alstom Transport, Bombardier, Siemens AG, Hyundai Rotem Company and Macquarie have already shown interest in the initiative. Domestic companies like Tata, Adani and the Essel group are also interested in the operation of private trains. The private train business also influenced a huge bump for IRCTC stocks. They hit a new high of 6% in the BSE last Wednesday two days before starting their third train. Experts say that by 2050 there will be more than 500 private trains in India whereas some critics say it will lead to complete privatization and adversely affect the Indian Railways social commitment.


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