Debroy panel debunks fears of privatization
It is clear from what has appeared in the media on the recommendation of the Bibek Debroy panel report on revamping the functioning of Indian Railways, that there is no suggestion to privatise the country’s railway system. This should end the canard that sections of the political class and workers’ unions have been spreading. The left parties especially must desist from fanning the unfounded fears of privatisation and implanting distrust in the minds of stakeholders at a time when all of them should be working together to extricate the mammoth railways from near decay as a result of decades of colossal mismanagement. They need to be more appreciative of the difference between greater private sector involvement and privatisation. Minister for Railways Suresh Prabhu has consistently dismissed the apprehension of privatisation but pushed for the need for a greater role of the private sector in improving the functioning of Indian Railways.
The railways needs a massive infusion of funds and technology — not all of the former and much of the latter can be met by the Government. Mr Prabhu has a target of Rs8.5 lakh crore to be pumped into the sector over the next five years. Some of this fund has already been sourced, and the rest has to be raised over the coming months. But this is just one part of the total money needed to turn around Indian Railways. The Debroy panel has recommended a considerable involvement of the private sector, without which the railways simply cannot be made healthy. The Railways Minister has talked about the role of private enterprise in the manufacture of rolling stock, wagons, construction and maintenance of stations and tracks. The thrust to invite foreign direct investment, along with the creation of an environment for the full-hearted participation of private players in Indian Railways, should hopefully work in the direction that the Union Government has in mind. It is the creation of an environment, though, that is of paramount importance; things like FDI will happen thereafter. Infrastructure development in the rail sector needs land, which is why the impasse over the land acquisition Bill must end soon.
The other area that needs to be recast completely is the internal functioning. As much as 94 per cent of the revenues that Indian Railways generates is consumed by operating costs, leaving just six per cent for investment. This is a pathetic state of affairs as it has led to the drying up of funds for critical needs. It is true that the legroom for massive changes may be severely limited here; not too many compromises are possible in the areas of salary, pension and such other costs. Indeed, salary and pension bills will only get higher with time. However, Indian Railways can improve its revenues in real terms through punctual and speedier functioning of trains, and cutting down on wasteful costs internally.
In the end, it is all about political will — it always has been. Mr Prabhu has demonstrated his willingness to walk the talk. He has not only been working to set the finances in right shape but also reached out to State Governments in a bid to partner them in the new growth story of Indian Railways. let’s hope results will show sooner than later.