Privatisation will put railways upgrade on track, says Niti Aayog's report

From ownership of locomotives and rolling stocks to modernising stations, improvement of the railways hinges on “private participation,” said Niti Aayog, in its report on strategy for New India, released on Wednesday.

The planning body, in its suggestions, said that the national transporter should consider opening up ownership and operations of freight terminals and ownership of locomotives and rolling stock to the private sector under a transparent, neutral (non-railway) and fair regulatory mechanism. It cited that the move will improve performance and spur investments for the railways.

“Despite its extensive reach and substantial growth in freight load, the share of railways in the transportation of surface freight has declined from 86.2 per cent in 1950-51 to 33 per cent in 2015, due to a shortfall in carrying capacity and lack of price competitiveness,” the report said, while seeking to revisit passenger and freight fares to compete with road transportation. 

Other key areas where Niti Aayog wants inclusion of private players are coach and locomotive manufacturing and repairs.

However, it added that since human safety is involved in the case of coaches and wagons, the railways should continue to have regulatory and technical control over manufacturing and maintenance.

This will ensure the safety of passengers in compliance with the general rules of the railways.

The report also cited station redevelopment where massive private investments are expected in the near future. It stated that the railways should increase retail revenues from stations by investing in facilities, modernising stations and contracting space to private players. The strategy of the Centre is to redevelop 100 out of 400 identified railway stations by 2022.

The planning body also batted for awarding station-cleaning contracts to private vendors. To restructure fares, the report asked the government to expedite the process of establishing the Rail Development Authority (RDA), an independent regulator already cleared by the government. 

“The proposed RDA will advise/make informed decisions via an integrated, transparent and dynamic pricing mechanism to determine rail fares and rebalance passengers as well as freight. This will improve efficiency,” it said. 

The report also highlighted the key constraints that railways is facing. This included over-stretched infrastructure with 60 per cent plus routes being more than 100 per cent utilised, leading to a reduction in average speed of passenger and freight trains. 

At present, the average speed of passenger trains is in the range of 44 km per hour, and for freight trains, it is as low as 24 kmph. 

Taking a dig at the current functioning of the railway machinery, it stated that delay in decision making, inadequate market orientation and long project approval duration lead to slow turnover rates and delays in implementation of projects. 

From 1950-51 to 2013-14, the route km increased by only 23 per cent against growth in freight and passenger km of 1,344 per cent and 1,642 per cent, respectively. 

The report said that because of this, the government has recognised the need for additional investment in rail infrastructure and scaled up investment by almost three times, from Rs 539.89 billion in 2013-14 to Rs 1.47 trillion in 2018-19 (budget estimates).

KEY FACTS 

• Fourth largest network in the world in terms of route kilometre (67,368 km in FY17) 
• From 1950-51 to 2013-14, the route kilometre increased by only 23 per cent against the growth in freight and passenger km of 1,344 per cent and 1,642 per cent, respectively 
• To improve this, the government has scaled up investment by almost three times, from Rs 539.89 billion in 2013-14 to Rs 1.47 trillion in 2018-19 (BE)