On track for privatisation? India must keep BritishRail’s privatisation disaster in mind to avoid similar pitfalls 

(Financial Express of 15.10.20)

Mega plan for privatization of passenger trains  unveiled by Railway Board a  couple of months ago  involves  a total of 151 trains in 12 clusters with  a minimum of 16 caches in each train running at 160 kmph. Eventually covering 109 routes, compared to the 9000 + passenger trains  which had been time tabled to run every day prior to the Covid19 lock down, this may not be much but is a good beginning. 

Moreover the flood of over 120 request for qualification (RFQ) received from 15 parties is perhaps an indicator of popularity of the project. According to the time line the bidders are to be short listed by  November 2020 for the final round, contracts placed by April ’21 and the first lot of private train sets to arrive by April ’23. 

Reportedly the operator may be allowed to import 3 train sets in each of the 12 clusters and rest to be  manufactured in India. The bidding is proposed to be on a revenue sharing basis and  the one that pays Railways the most will win.

However perhaps a short history lesson of British Rail would be in order.  During the Margaret Thatcher  era it went in for a massive  privatisation exercise which proved to be an unmitigated  disaster. Treating Maintenance of infrastructure, Rolling stock  maintenance, and Passenger and Freight Train Operations etc. as separate activities were all privatised as distinct business unit, and scores of private entities were created for every possible activity which British Rail had been hitherto engaged in. 

         However, a few years down the line all hell broke lose when a serious mishap took place at the Potter’s Bar station  involving human casualties. A statutory enquiry revealed that that the new company called ‘Network Rail‘ now owning Rail infrastructure had been cutting corners resulting in the mishap. 

         With stringent conditions for liability and compensation to be paid is case things going wrong,  in  the event of a train accident, the first people to reach an accident site was not the  relief train,  but the lawyers who had to find who and what went wrong to establish the liability, and  possible  compensation to be paid !

A Public interest report from the Centre for Research in Socio Cultural Change (CRESC) a Manchester, U.K.  based think tank  entitled  ‘The Great Train Robbery: rail privatization and after ’ amongst other things had raised the issue that ‘public subsidies are essentially paid out to shareholders as dividends and Network Rail’s large and unsustainable debt, which has negative consequences for physical infrastructure and likely means that rail will one day have to be bailed out by the public.’ 

Ultimately the Rail infrastructure had to be ‘bailed out’,  taken over by the government, which mercifully will  not be the case with Indian Railways, as only a few Private Train Operators (PTOs) are to be inducted, and rest of the system is not being privatized ! 

While the PTO is to introduce Coaches or Train sets with technology  superior to that existing on Indian  Railways (IR), upgrade of track to be capable to run at 160 kpmh from existing 120 kpmh, will need to be carried out by IR on top priority. 

Moreover the proposed  private trains will be sharing track space with other Passenger  and Freight trains, which could lead to disputes for according precedence. For in order that the private train is punctual it may have to be accorded a priority at the cost of other trains, to avoid a penalty for being  late  ! 

Anticipating a plethora of such problems which may arise in PPP (Public Private Partnership) initiative, post of a ‘Regulator’ is proposed to be created. With commissioning of the West and East Dedicated Freight  Corridors private sector may be get an opportunity to invest in Freight wagons  also and run them, keeping the proposed Regulator quite busy !

While  investment by private  sector is most welcome it should not end up with a lot of rolling stock being purchased, and with no matching maintenance facility being created  eventually  run into ground. The operator may simply walk away while Banks or investors who would have financed the whole project  left holding the baby !

Again an observation of  CRESC  on British Rail’s fiasco, ‘Perhaps best known is the systematic gaming of the train operating franchise system. Franchisees – as in the catastrophic case of the East Coast Line – can walk away from the franchise without serious penalties when the ludicrously unreal projections that won the contract in the first place turned out to be fantasies.’ 

Hopefully Indian Railways  will learn from the pit falls of the BR privatization,  and be able to carefully  avoid them ! 

R.C.Acharya, 

former Member Railway Board.

Email : ram34034@gmail.com