Our railways have made efforts to increase the standards of the trains, provided ease of access to the passengers by enabling them to check the pnr status on mobile sms and build new tracks. Though the Indian railways have shown appreciable performance over the past few years, there is an argument that it is still far beyond its capacity. Indian railways have a severe capacity constraint. It is because of this reason; the railways weren’t able to capitalize on the increasing demand of freight transport. National Transport Development Policy has passed several suggestions to increase the orientation of railways towards the commercial sector.
Booster shots of privatization:
There were a few suggestions to privatize the railways to some extent so as to ensure reliable performance. The following are the expected outcomes of privatization:
- Indian railways have targeted to increase a track length of about 2,500 kilometers every year. However, it only manages to increase about 180 kilometers. Privatization provides the flexibility of sharing the expenses with the private firms.
- It is to be noted that over 10% of the railways income is utilized to run its noncore activities like schools and hospitals. Outsourcing these activities would turn as a huge sigh of relief to the railways.
- A few major railways projects are delayed for a variety of reasons. The best way to put an end to this time lag is to divide the railways into smaller companies. Projects can be executed in the least time possible by doing so.
Inspiration from Japan and Argentina:
Experts suggest that the mix of reforms that took place in Japan and Argentina can be implemented here in India to boost its standards like never before. The above statements of privatization have their roots in these countries. Prior privatizing the railways in Japan, it suffered a huge loss of about $50 million per day. However, the further consequences have made it to lose its autonomy over railways.
- Japan railway reforms: All the services were split into joint stock companies as a part of their reforms. Six major firms took up the responsibility of passenger services whereas the freight was handled by a single company. Another reputed corporation takes care of the bullet train services. A distinct body is setup to clear the historical debt of Japanese railways. These reforms have increased the profit earned by the railways and also lowered the risk of accidents.
- Argentina railway reforms: Argentina showed their interest in privatization after incurring huge losses of $1.4 billion annually. This strategy allows bidders to quote their bids to take up the servicing and maintenance tasks. This greatly helped Argentina to cut down their expenses incurred on its subsidies to commuter services.
However, the practicality of these reforms isn’t easy with India railways. Indian railways comprises of 17 administrative zones; 8,000 railway stations; 15,000 trains and over 13 lakh employees. These numbers speak about the vastness of our railways. The Indian government isn’t in favor of privatization, as it can’t subsidize the poor passengers.