Sunday, May 25, 2025
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Outlook for the Railways

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The Bibek Debroy Committee recommendations highlight the fact that the Indian Railways can do with dollops of investment. Railway Minister Suresh Prabhu had admitted it in his budget. The Railways have over the years been losing out in both freight and passenger traffic. The proposal of the Committee that investment may be attracted in rolling stock should be commended. There are two ways of doing it. Private companies can set up units and sell them to the Railways. Alternatively, the Indian Railways can allow units to be privatized. The second route will of course raise a political storm. Anyway, what is most important is working out details of implementation. The issue of rolling stock leads to the question if private initiative will be restricted to supply of stock on a one-time payment or mean leasing of stock to the Railways. It goes without saying that emphasis should be laid on building and maintaining tracks. But it involves the tricky matter of land acquisition. Will private parties come forward despite the obstacles? Another major issue is that of signaling. The problem can be addressed by establishing a Railway regulator which does not impinge on the powers of the Railway Board. It accords with a previous proposal that procurement should be decentralized to prevent loss caused by cartelization.

It has been suggested that the Railway Board can be split into two entities—one attending to freight and passenger concerns and the other dealing with infrastructure.  It will lead to corporatization of the Railways. But if private parties are allowed directly to provide freight and passenger service, there will be arbitrary fixing of rates. The regulator will have its hands full dealing with this problem. Hard thinking is necessary before private players are given a free run in doing business with the Railways.

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