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Indian Railways 168 years of history timeline, Why Indian Railways is called Lifeline of the Nation?

Indian Railways 168 years of history timeline, Why Indian Railways is called Lifeline of the Nation?

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  • GS 3 || Economy || Economic Reforms || Transportation

Why in news?

Indian Railways is often called the lifeline of the nation. It not only transports passengers and goods, but it also connects the entire nation.

Indian Railways – Brief Introduction

  • According to World Bank data, India had 68,443 route kilometers of railways in 2018.
  • In the fiscal year that ended in March 2019, Indian Railways transported 123 crores (1.23 billion) tonnes of freight and carried 844 crores (8.44 billion) passengers.
  • Along with Russia, the United States, and China, India has one of the world’s four largest rail networks, which includes passenger and freight trains as well as schools and hospitals.
  • Indian Railways owns a significant portion of 16 public sector enterprises (PSUs) and other organizations in India that are involved in rail transportation..

What is the need of Privatization of Railways?

  • There is room for capacity expansion once the railways allow private companies. This is an important point because, in 2018-19, 8.85 crore individuals were on the waiting list, and only 16 percent of those on the waiting list were able to get a reservation.
  • According to the Railway Board, five crore intended passengers will be unable to be accommodated in 2019-20. During festival and summer seasons, travel demand outstripped availability. The demand outstripped the railways’ capacity..
  • The main goal of this move is to provide passengers who are accustomed to traveling by plane or air-conditioned bus with a different train experience.
  • Train cleanliness and food quality could be improved by privatization.
  • Train punctuality must be improved because time is valuable.
  • With more money coming in from the business sector, more technology can be introduced, improving train safety and comfort.

Recommendations of the BibekDebroy Committee

  • Transition to Commercial Accounting: Indian Railways’ financial statements must be redrawn in compliance with nationally and internationally accepted principles and procedures.
  • Railways’ non-core functions must be privatized: Operating hospitals and schools, catering, real estate development, including housing, infrastructure construction and maintenance, and manufacturing locomotives, coaches, wagons, and their parts are all examples of these activities.
  • Indian Railways Manufacturing Company expansion: Wagons are currently manufactured in the private sector. Coaches and locomotives may be on their way.
  • Encouraging Private Entry: Private entry into freight and passenger train operations in rivalry with Indian railways, as well as private participation, should be permitted.
  • Independent Regulator: Transfer regulatory authority from the government to an independent regulator, as the private sector will only invest if access to railway infrastructure is fair and open.

Advantages of Privatisation of Railways:

  • Better Infrastructure: It will result in better infrastructure, which will result in better amenities for travelers.
  • Balancing Service Quality with High Fares: This move would encourage competition, resulting in an overall improvement in service quality.
  • Fewer Accidents: Because private ownership is associated with greater maintenance, proponents of privatization believe that it will reduce the frequency of accidents, resulting in safer travel and longer-term financial benefits.
  • Increased Security: Private engagement can lead to improved accountability and monitoring, which can help to reduce the number of railway accidents.
  • Improved Technological Innovation: Private engagement can lead to the infusion of contemporary technology and the expansion of Indian railway capacity..

Challenges associated with privatization of Indian Railways:

  • Because Indian Railways is government-owned, it is able to provide nationwide connectivity regardless of profit. This would not be achievable with privatization since less popular routes would be deleted, resulting in a reduction in connectivity.
  • Given that a private corporation exists to make a profit, it’s only logical to think that the simplest method for Indian Railways to make money is to raise fares, effectively putting the service out of reach for those with lesser incomes. This will defeat the system’s primary goal, which is to serve the entire people of the country regardless of income level.
  • Private businesses are unpredictable in their transactions and do not reveal their governance secrets to the general public. Should there be a discrepancy, it would be difficult to lay the blame on a specific company in such a case.
  • Thousands of railway workers in production and ancillary units will lose their jobs as a result of this decision.
  • Because privatization produces private monopolies, it necessitates restrictions to avoid monopoly power abuse.
  • To appease shareholders, private players may attempt to maximize short-term revenues while avoiding long-term investments. The UK, for example, is seeing a shortage of investment in new energy sources; privatized corporations are attempting to make do with current plants rather than investing in new ones.

Way Forward:

  • Independent Regulator: Creating a level playing field for private players will necessitate the establishment of an independent regulator. In order to achieve this goal, the process of establishing the Rail Development Authority, which has already been approved by the government, must be accelerated.
  • Sustainable Pricing: The Indian Railways’ pricing mechanism needs to be revisited in order to make the passenger and freight divisions sustainable. Tariffs should be competitive with road transportation costs.
  • Railway Modernization: The BibekDebroy committee’s suggestions, such as expanding the Indian Railways manufacturing company, must be implemented.

Mains oriented question:

India needs a rail network that is not just efficient, dependable, and safe, but also affordable and accessible.” Examine the remark critically in the context of railway privatization. (200 words)