Public private partnership (PPP) is needed to transform Indian railways; but the transition to PPP model needs to be managed carefully. Analyze.

Indian railways have been seeing PPP involvement in various forms like 150 passenger trains, Tejas, food deliver services, etc.

PPP in Indian railways should be encouraged because:

  • It pushes the operational efficiency up (current operating ratio of Indian railways is 9-98% in last few years, which is one of the worst for any enterprise).
  • Provides a range of choices.
  • Increases facilities & improves the maintenance.
  • Avoid accidents (through private sector proactive intervention) & help in customer safety.
  • Build image of Indian railways, which is critical on the basis of lacklustre performance, huge train delays & lack of hygiene.

However, this transition is not going to be smooth because:

  • Problem of bureaucratic red tapism is still prevalent.
  • Opposition to privatisation (due to fear).

Need to manage transition model carefully because:

  • It might lead to increased costs which will make it inaccessible to general public.
  • Primary mode of transportation for poor, hence direct impact on their livelihoods.
  • Railways employ a large number of employees and primary source of government employment, hence fear of privatization may push it to a stop.
  • Private trains & their efficiency have been still untested, so it’s too early to comment on the commensurate benefits.
  • Inclusiveness and reduction in inequality requires consideration of the poorest section & hence the transition needs to be with incorporation of opinions from stakeholders, civil society, & activists.
  • Railways needs overhaul but no single organization can replace even one sector of railways working. Hence, government needs to invest more rather than pulling hands.

Railways are the engine of the Indian life in true sense. Hence, any step regarding PPP model or increasing private investments needs to be carefully analysed in terms of social, political & administrative costs.


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