Speaking at the 20th all-India conference of the Bharatiya Railway Mazdoor Sangh (BRMS) in Chennai on April 9, the Minister for Railways, Ashwini Vaishnaw, said that the government had no plans to privatise the Railways. He did, however, stress on the need for the Railways to adopt latest technology to meet the aspirations of the passengers, and that indigenous technology, like the contribution of Integral Coach Factory (ICF) to Vande Bharat Express, should take the sector forward.
Reiteration by the government that privatisation of the Railways was not on the agenda is nothing new. There’s a need, however, to look at what is not stated explicitly and analyse the signals that emanate from the announcements in recent years.
The Railways launched an ambitious plan to privatise 5 per cent of Mail/Express trains in 12 clusters with a view to inducting modern technology and improving travel experience. It projected an investment of approximately ₹30,000 crore by the private sector.
Tenders were called, but the response from prospective bidders was poor as the Railway Board failed to gauge the concerns raised by them. The project is as good as shelved as nothing has been heard about its revival for nearly a year now.
In November last year, the Railways sought participation from State governments, private players, and public sector undertakings to operate around 150 tourism-focussed trains. The announcement said that old ICF coaches would be offered to the prospective players, which would need to be refurbished and then operated. Nothing has been heard since, and in any case the project does not seem to be viable except for a handful of trains.
Freight segment
As for the freight segment, private container trains have been operational since 2006 in a limited way but large-scale penetration of private freight trains has not happened. This is partly due to the presence of the Railways’ own CONCOR, which remains a market leader, and its reluctance to provide a level-playing field to private operators.
There have been other initiatives as well to bring private players into freight business, like the largely successful transportation of automobiles in privately-owned special-purpose wagons and the more than a hundred privately-owned rakes to carry steel coils, bulk cement, fly ash, alumina, etc. But in these also the thrust has remained half-hearted.
The Railways has been talking of fast-tracking the process of auctioning routes in the yet-to-be-completed dedicated freight corridors (DFCs) to private operators to run freight trains. But even this is not likely in the near future, as it would need establishment of many inter-modal depots and depend on the Railways’ progress in exploiting the true potential of DFCs in terms of permissible speeds and loads, and upgradation of feeder routes. And, more importantly, the Railways’ willingness to look at the prospective private players as partners and not as competitors is key.
Production units
So, does this lacklustre movement towards operation of private trains, and the latest assertion by the minister that privatisation of railways was not on the cards, hide a strategy? We have been hearing of the plans of corporatisation of the Railways’ production units (PUs), its manufacturing factories which employ 40,000 employees; three units, ICF/Chennai, RCF/Kapurthala and MCF/Lalgunj, for coaches, three units, CLW/Chittaranjan, BLW/Varanasi and PLW/Patiala, for locomotives and RWF/Bangalore, for wheels.
In 2019, on reelection, the government floated the idea of hiving off these PUs and bring them under one entity, a corporation tentatively called Indian Railways Rolling Stock Company, as part of its 100-day action plan. It also talked of beginning the corporatisation process with pilot implementation at MCF. The move appears to have been put on the backburner.
But the track record of the government in this area isn’t poor. It has succeeded in corporatising Ordnance factories, with all 41 of them converted into seven Defence Public Sector Undertakings. Besides, the PPP model was successfully implemented earlier for manufacture and operation of locomotives with Alsthom and GE (now Wabtec) at Madhepura and Marhowrah.
Another significant signal is the news that surfaced in March this year that the Railways was set to float a large tender of around ₹25,000 crore for the procurement of 200 equivalents of Train 18/Vande Bharat trains to be built largely in private factories in India. This came after the Budget announcement that 400 Vande Bharat trains would be introduced in three years, which was met with scepticism as the Railways had not been able to make even the third train after the first two were introduced in 2018-19.
In this context, exploiting the non-Railway manufacturing capacities in the country, what with four such factories in place and at least two under construction, would be a welcome move.
Is the Railways silently moving towards privatisation of manufacturing units, by encouraging the private sector and downsizing its PUs gradually? Silently, because such a big-ticket strategy is better not stated explicitly given the sentiments and politics involved in depriving a thriving government sector. Things will become clearer in the coming years and the developments would be watched keenly.
The writer, a Retd. General Manager, Indian Railways, is an independent rail consultant