Even as Prime Minister Narendra Modi walks the tightrope between full-fledged privatisation and attracting private sector funds and foreign direct investment to revive a visibly ailing Indian Railways, there are caveats that must be sounded for a more nuanced understanding of the situation. While it is absolutely correct to say that severe money crunch and lack of adequate investment have allowed several key areas of railways operations, particularly safety and maintenance, to go haywire, it is equally important to remember that Indian Railways remains one of the largest public sector enterprise in the world and is the biggest employer as well. It is but natural that railway unions are afraid that wholesale corporatisation of the massive railway sector would render a large section of that population redundant. However, there are key reasons why inflow of private money under a strict regime of governmental regulation can seriously reinvigorate the sick sector. Beginning with restructuring of the Railway Board (suggestions for which have been sought from the Bibek Debroy-headed committee) and fine-tuning its operations, there is the need to pump in private investments to restore life to train fleets and lines running currently and desperately requiring attention to their wear and tear. In addition, all the new and ambitious projects that have been laid out in Railway Budget 2014, such as bullet train systems, high-speed connectivity between commercial city centres, suburban corridors as well as freight projects to connect new industrial hubs, cannot even begin to take off unless a massive inflow of funds, whether foreign or domestic private, is ensured over a considerable period of time. Moreover, private public partnership can also plug the gaping holes in the bloated costs that railway projects routinely incur, not only because the railways is sinking under a pile of corruption cases, but also there’s a systemic inefficiency that is chipping away at the core of this gargantuan public sector enterprise.
Part corporatisation, therefore, is a possible solution to all the major ills of the railway sector, provided it is brought about in a gradual and phased manner and is subject to heavy oversight on the part of the government. Listing the companies in stock exchange and attracting minority investment as well as tying up with major private sector companies to develop areas through which the railway tracks are paved, will certainly ease the burden on the government’s shoulders to some extent. Since FDI in new projects would need substantial revamping of the industry outlook in the eyes of the investors, the government should look at fixing the existing infrastructure before jumping on the bandwagon of bullet trains connecting smart cities. Instead, the primary thrust of inviting private funds should be to clean up the mess that are our sprawling railway stations, improving the sanitation conditions inside the trains, the catering and allied services on trains, safer and state-of-the-art mechanisms to make the tracks accident-proof, as well as significantly raising the freight services to leave a last impact on the co-dependent mining, and heavy industries.