1. Introducing competition in Indian Railways

Introducing competition in Indian Railways

In Europe, a large number of private operators have entered the railway system and have changed the way people commute by train

By: | Published: April 20, 2015 12:15 AM

In a major initiative, the Bibek Debroy committee has proposed to invite private players to compete with the Indian Railways by running sleek, brand-new coaches replete with high-tech gadgetry zipping through the countryside at 200 kmph or above, providing a new level of experience to the discerning railway users.

The committee has extensively documented the experience of European nations where a large number of such private operators have set up shop and have changed the way people commute by train.

The committee, in its 323-page report, has cited the example of opening up of the civil aviation and telecom sectors which has given millions of Indians freedom to choose from varied service providers and has also made significant advances in standards of service in these sectors.

Unfortunately, unlike airlines which can access the open skies as long they pay licence fees, obey the ATC’s instructions and stick to the slot allotted at the airports, and the way telecom operators handle traffic on the wave length exclusively provided to them, the rail track needs a single entity directing trains onto it. Hence, these new trains need to access the same tracks being used by the Indian Railways—13,000 passenger trains and 8,000 freight trains—over its vast 64,000-km network.

According to the report, of the total 1,219 sections on the Indian Railways, 576 or almost 50% carry traffic at 100% or above the designed capacity. And of the 247 high-density sections—most of them routes which the private train operators would like to run their trains on to obtain maximum occupancy—161 or over 65% are already saturated, having over 100% utilisation.

These new trains would have a problem from day one for priority in running while competing with the Indian Railways’ own need for giving precedence to the scores of Rajdhanis, Shatabdis and super-fast trains, not to mention the freight trains including ConRaj (Container Rajdhani) with a guaranteed transit time of 48 hours between Tughlakabad and the Mumbai port.

Aware of this overcrowding, railway minister Suresh Prabhu placed on priority doubling, tripling and even quadrupling of 1,200 km of such high-density routes in his maiden Budget. Till the additional tracks have been laid and commissioned, perhaps private train operators will have to wait.

However, the scenario may change if the Dedicated Freight Corridor is fully operational, on which, as estimated by the committee, 55% of the current revenue earning freight of the Indian Railway may move, freeing up track capacity and, interestingly, enabling timetabling of freight trains.

The committee has proposed that the Railways Act be amended to allow the levy of tariffs by private operators, which no longer would be administered, but will be left to the market, with a qualification for such passenger on un-remunerative lines, somewhat as for the airlines sector.

The committee finds it necessary to set up a public service costing (PSC) exercise, independent of the Indian Railways, which could be entrusted to the railway regulator. It would determine the costs incurred by the Indian Railways and other rail service providers on construction, operation and maintenance of lines in specified locations and in providing rail services on identified existing branch lines which are purely in the nature of providing social services, and suggest fares accordingly.

Unfortunately, opening up of container business to private operators almost a decade ago has not been a very happy situation for the Container Corporation of India (Concor), with the Competition Commission of India (CCI) mediating on behalf of private players. Some of the charges concern discrimination against private container train operators (PCTOs) by prohibiting transportation of goods such as ores, minerals, coke and coal which constitute almost 65% of freight traffic, arbitrary increase of haulage and stabling charges for PCTOs, unfair advantage to Concor by providing land to it at favourable terms, and denial of terminals and sidings owned and exclusively used by Concor to PCTOs, thus increasing costs for PCTOs and making them less viable.

In the process, it has opened up a Pandora’s box for the Indian Railways, with the CCI establishing its jurisdiction over matters of ‘commercial nature’, as opposed to sovereign functions of the ministry of railways which, in its opinion, were outside the jurisdiction of the CCI.

The private sector entry into the catering business at food courts at major railway stations and recently on running trains has, however, taken place without any major hiccup—at least for now.

The author is former member, Railway Board

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  1. T
    t p
    Apr 20, 2015 at 8:37 am
    This proposal is good & Corruption in railways, recruitement & operations must end. VRS to the existing staff & fresh well qualified youngers with age group 25 to 30 , with good character certificates from college & endort from the police is the need of the hour.
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