Is Indian Railways being privatised without our knowledge?

Is the furore over the rail fare hike and the subsequent decision to partially roll it back hiding the real story? Is the Indian Railways, in fact, being privatised block by block?

That is the question Outlook seeks to cover in its exhaustively researched cover story titled, "The Great Railway Bazaar". The story looks at six signs of what it calls "creeping privatization", ranging from the leasing out of land belonging to the railways to real estate developers on 30 - 90 year leases, and the outsourcing of services such as hospitality, maintenance and catering to private sector players.

Was Trivedi's budget influenced by Planning Commission views? AFP

The leasing out of land, in particular, is a touchy issue. The Rail Land Development Authority has reportedly found 52 sites that are commercially viable with the potential of earning Rs 5500 crore. The largest site in Delhi is being leased out to Parsvnath developers, which is rebuilding 750 railway staff quarters. "In lieu, it will be allowed to build luxury residential flats in the remaining area," says the magazine.

The Public Private Partnership method used by the government to develop various sectors of Indian Railways also requires scrutiny. In 2009, Laloo Prasad Yadav announced that two loco manufacturing units would be set up in Bihar through the PPP method.

However Outlook points out that the contract has been put on hold following differences between members of the railway board and the Planning Commission, as the latter wanted more favourable terms for the private party in question.

The Planning Commission, it would further seem, is pushing for increased private sector participation in the railways because it says that this is the only way to make sure that the Indian railways is able to operate in a viable manner.

The budget presented by former Railways Minister Dinesh Trivedi seems to be strongly influenced by these views. Outlook reproduces part of a missive to Trivedi from Planning Commission chairman Montek Singh Aluwahlia which clearly makes note of the fact that the railway management needs to be "restructured on lines of business... with each business working as a profit centre".

Trivedi is also a good friend of Railway Reforms panel head Sam Pitroda and the story hints that Pitroda himself may have played a pivotal role in framing the budget.

But is a slow process of privatization really the only way to keep the railways above ground? A number of railways officials quoted in the story strongly disagree, saying that with better management the Indian Railways could easily transform itself into a viable, profit making organization. But, says Outlook, "there's no denying a sinking feeling that the railways has been run to the ground by successive rail ministers".

Read the whole story.

Updated Date: Mar 26, 2012 11:18 AM

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