Is the Modi Govt Preparing to Sell Off Indian Railways?

Written by Shilpa Shaji | Published on: June 24, 2017

With the intervention of the private sector, the fares may be hiked.


Indian railway
Image Courtesy: DQ India


The Indian Railways is moving fast towards total privatisation as seen in the light of the Centre's decision to auction 23 railway stations across the country. Centers’ new move came as a part of Public Private Partnership (PPP) projects.

The stations will be allocated to the private firms through auction. The firms getting tender will be allowed to modernise the stations. As part of the modernisation of stations, Railways will allow developers to build malls, cinema halls, hotels and specialty hospitals within the station premises. 

The financial model for the redevelopment work has been framed in a way so that the government doesn't incur any expenditure as the developer would be rebuilding the railway stations and maintaining it for 15 years.

In return, the firms would be granted 45 years’ leasing rights for the commercial properties developed at these stations. It gives them right to commercially exploit railways’ land. The firms will also be allowed to maintain all the station facilities like power, platform maintenance, parking, food stalls, retiring rooms, etc.

The redevelopment of the stations is occurring through different phases. In the first phase, the responsibility of redevelopment had been given to Indian Railway Station Development Corporation (IRSDC), a joint venture Company of Ircon International Limited and Rail Land Development Authority.

A senior official from Indian Railways stated that the revamping work of Habibganj Railway station is likely to be commenced soon.  For the facelift at Habibganj, developer Bansal Group has obtained financial loans of a total 400 Crores. The business firm will take care of all the station facilities like power, platform maintenance, parking, food stalls, retiring rooms, etc.


Also Read : Not Much to Gain & Much to Lose: Selling Indian Railways Bit by Bit


In the second phase of redevelopment 23 Railway stations will be auctioned.  Kanpur Central, Allahabad, Lokmanya Tilak, Pune, Thane, Visakhapatnam, Howrah, Kamakhya, Faridabad, Jammu Tawi, Udaipur City, Secunderabad, Vijayawada, Ranchi, Chennai Central, Kozhikode, Yesvantpur, Bangalore Cantt, Bhopal, Mumbai Central, Bandra Terminus, Borivali, and Indore are those stations.

Eyeing on Udaipur, Howrah, Indore, Secunderabad, Pune, and Faridabad railway stations, Malaysia’s state-owned Construction Industry Development Board (CIDB) will participate in the auction . It is said to be one of the potentially big Foreign Direct Investment in railways. According to the officials from Railways, apart from CIDB, many Korean and Japanese companies have expressed their interest in the redevelopment project. Through, liberalizing the policies, Indian Railways will become a fertilized soil for Foreign Direct Investment.

Earlier, in 2014 India allowed 100% FDI in railways infrastructure through automatic route. Through this foreign companies have established two rail loco factories in Bihar with an investment of Rs 3500 crore. According to the railway official, various investors from Japan and South Korea have also expressed in the station redevelopment projects and the government has queued up 400 stations for redevelopment.

The private participation in public sector indicates the implementation Bibek Debroy committee report. The pro-privatisation wing is substantiating their point on the basis of it. The report favored private participation which is said to be the key to increase the efficiency of the system. The committee has also looked at the railway restructuring experiences from multiple countries, including Japan, the United Kingdom, Germany, Sweden, Australia, and the USA, as examples.

Indian Railways moves about 2.3 crore people and 3 million tons of goods every day.  The majority of the Indian populations, who cannot afford private vehicles, rely on the public transportation system. Railways are the most viable mode of transport for this section of the society. Millions use railways which connect geographically diverse population, each day.

Connecting the remotest corners of the country the railways runs 12,617 trains which carry both passengers and freight. Privatisation will affect the economic friendly transportation and connectivity to these areas. Preference for profitable route will result innegligence of the non-profit yielding routes.

Privatisation will also affect employees in the railways, including 14 lakh employees and almost as many pensioners.

Indian Railways which focuses on the service of the society will become a money yielding machine through privatization. With the intervention of the private sector, the fares may be hiked.  The privatization will also lead to market monopoly. Monopoly through the private sector may tend to cause the troubles include low accountability, lack of responsibility, producer-centric approach, exploitation of the poor, etc.