Past efforts to support the cash-strapped Indian Railways’ modernisation plans through the public-private partnership (PPP) model have had little if any success, least of all the project to build 100 world-class stations flagged by then railway minister Dinesh Trivedi in the 2012-13 Budget. However, the NDA government is revisiting the model, possibly with more incentives to private investors.
Ahead of the Railway Budget FY15 set to be unveiled on Tuesday, Prime Minister Narendra Modi has pitched for a larger role for the private sector in the the railways, including upgrading stations through a sustainable PPP model. The idea is to create commercial complexes at the stations that would ensure revenue streams robust enough to attract private operators.
At the inauguration of the 25-km Katra-Udhampur rail line in Jammu on Friday, Modi said: “We want railway stations to have better facilities than airports. Stations need to be modernised and this can be done through the PPP model because it is economically viable. I have discussed it with railway officials and you will see a change in future. We will work it out soon.”
The PM added: “In (the PPP model), private parties would also be ready to invest because this is a good project economically and will benefit everyone. This would be a win-win situation.”
Modi said the stations in metros and important cities such as Jammu would be among the first to be developed using private funds.
The UPA government, it may be recalled, planned to renovate 100 major railway stations with around Rs 10,000 crore of private funds. However, private players have stayed away, unconvinced of its commercial viability. The railways later scaled down the plan. The newly-formed Railway Station Development Corporation is currently looking at only five stations to be redeveloped with private investments: New Delhi, Anand Vihar (in the capital), Chandigarh, Bhopal and Pune.
One advantage of the PPP model is that it could be cost-neutral for the railways. The railways, which had reported an unhealthy operating ratio of 90.4% last year, is struggling to find funds for replenishment of old rolling stock, leave alone expansion. Its recent tariff hikes — 14.2% across classes in the case of passenger fares and 6.5% for freight charges — had to be partially withdrawn in the case of short-distance suburban travel due to the political backlash.
In the 2013-14 budget too, there was an announcement that the railways would raise Rs 2,000 crore through PPP for its