From UPSC perspective, the following things are important :
Prelims level : Not much
Mains level : Paper 3- Adoption of PPP model by the Indian Railways and related issues
Adoption of the PPP model by the Indian Railways will help it get rid of the many issues it suffers from. This article analyses the two initiative by the railways in this regard and spells out their advantages and challenges.
Significance of railways
- Its route spans about 68000 km.
- It employs over 1.2 mn people and generates approximately Rs 2 lakh cr annually.
- So, a major contributor to jobs, GDP, and mobility.
- Efficient and optimal use of the railways could further add up to 1% to GDP.
Adopting PPP model
- The time has come to modernise the Indian Railways, make it world-class, and a key driver of the country’s growth.
- To do so, India must involve the best resources via PPP to bring in the latest technology, leading practices, and efficiencies.
- PPP has been actively deployed as a mechanism in Europe and Japan.
Two initiatives of Indian Railways involving PPP model
1. Operation of trains on selected route
- Indian Railways’ proposal features a list of 109 pairs of routes through 151 trains to private operators.
- Proposed routes include Delhi–Mumbai, Delhi–Chennai, Mumbai–Chennai, and others.
- PPP operators are expected to finance, procure, operate, and maintain the allocated trains.
- The concession period will be for 35 years.
- The initiative will bring in cutting-edge, technologically advanced rolling stock, shorter journey times, enhanced job growth, better safety, and best-in-class service standards.
- It will bridge the demand-and-supply deficit for passengers.
- The PPP investment is expected to be in the range of Rs 30,000 cr—in a Make in India–led growth strategy.
- Encouraging domestic manufacturing of rolling stock, these projects will also create direct and indirect employment.
2. Redevelopment of railway stations
- Initially, 50 stations will be bid out and funded through land monetisation as well as user charges.
- The modernisation and redevelopment of stations will be conducted primarily through Indian Railway Stations Development Corporation Limited, Rail Land Development Authority and other central government entities.
- The PPP basis is under the Design, Build, Finance, Operate and Transfer model.
- It entails utilising the potential of real estate for excess land and air space in and around the stations for development through PPP.
- The 50 big stations have been planned to be bid out through the PPP route aimed at bringing in investments exceeding Rs 50,000–60,000 crores.
Challenges involved in the adoption of PPP model
- One of the primary challenges will be independence of adjudication in disputes.
- Other issues will be the pricing strategy to remain competitive yet stay profitable, given the competition through air, road, and to some extent, water transport.
- An independent regulator could go a long way towards allaying concerns of equitable treatment of PPP operators and ought to be considered strongly.
Consider the question “Examine the opportunities and challenges in the adoption PPP model by the Indian Railways.”
The introduction of PPP in Railways is a welcome step and can lead to the kind of reforms that can help transform India and make it a global leader.