Railway Reforms

Privatisation of Indian Railways


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Issues with allowing operation of passenger trains by private players

Indian Railways has launched the process of opening up train operations to private entities on 109 origin-destination (OD) pairs of routes using 151 modern trains.

Objectives of privatisation

  • To introduce modern technology rolling stock with reduced maintenance.
  • Reduced transit time.
  • Boost job creation.
  • Provide enhanced safety.
  • Provide world-class travel experience to passengers.
  • Reduce demand-supply deficit in the passenger transportation sector.

Issues with the move

1) Responsibility issue

  •  Railway crew will work the trains (151 trains in 109 routes) which will be maintained by the private investor.
  • All the other infrastructure, track and associated structures, stations, signalling, security and their daily maintenance owned by the Railways will be fully utilised in running trains.
  • Thus, the responsibility of the private investor ends with investment in the procurement and maintenance of coaches.
  • Train operation, safety and dealing with every day problems rests with the Railways.
  • In case of an unfortunate event, fixing responsibility will be an issue.

2) Day-to-day problems

  • Provision of an independent regulator to resolve disagreement, discords and disputes.
  • But this regulator will not be able to solve day-to-day problems of dichotomy unless the basic issue is resolved.

3) Speed issue

  • Nearly all trunk routes in the existing network are speed limited to 110 kmph very few permit speeds of upto 120-130 kmph.
  • To raise it to 160 kmph, as proposed, there has to be track strengthening, elimination of curves and level crossing gates and strengthening of bridges.
  • There is no appreciable reduction in transit time for most proposed trains, when compared with the timings of the fastest train now operating on that route.

4) Passenger fare issue

  • In the proposal, the Railways or government have no role in fixing passenger fares.
  • Fares will be beyond the common man’s reach.
  • Fare concessions extended to several categories of people will not be made available by the private investor.
  • The very objective of commissioning the Railways as a public welfare transport organisation is defeated.

5) Reservation in Jobs

  • The private investor is not bound to follow reservation regulations in employment.
  • This, in turn, will deprive employment opportunities for those who are on the margins of society.

6) Limited Coverage:

  • An advantage of Indian Railways being government-owned is that it provides nation-wide connectivity irrespective of profit.
  • Privatisation of railways would mean the railways will become a profit-making enterprise, this would lead to the elimination of railways routes that are less popular.
  • Thus, the privatisation of railways can have a negative impact on connectivity and further increase the rural-urban divide.

7) Impact on the Economy:

  • Indian Railways is the backbone of India, it provides low fare transportation to agricultural and industrial trade.
  • Therefore, privatisation of Indian railways shall definitely affect the Indian economy at large.
  • Way forward
  • There should be no need for the government to take a dual role of a facilitator as well as a participant.
  • In the case of the metro railway services, Hyderabad, for example, an ideal PPP project, the concessionaire is solely responsible for daily maintenance, operation, passenger amenities and staff issues.
  • The State government steps in when it comes to land, power, permissions, law and order, etc. Fare determination is in consultation with the government.
  • Instead of a private entrepreneur, Indian Railway Catering and Tourism Corporation, a government undertaking which has gained experience in running the Tejas Express trains, could have been given the role.

Consider the question “Indian Railways often hailed as the lifeline of the country continues suffering from several issues. In light of this, evaluate the pros and cons of the privatisation of railways.”


This project of privatisation of trains should not result in the common man being deprived of travel facilities. The Indian Railways is a strategic resource for the nation hence it should not be judged solely on its profit-generating capability or market-based return on investment.

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