The Indian Railways is in the early stages of trying out privatisation, compared to other modes of transportation such as roads and ports. The sheer complexity of the organisation, strategic nature, and the Railways being one of the political tool to reach out to voters and vast employees, renders privatisation a tough task.

Employing some 13 lakh people and almost as many pensioners, the Railways moves about 2.3 crore people and 3 million tonnes of goods every day. It also has a fairly huge social obligation, which is estimated at over ₹30,000 crore.

As private investors look to invest in Railways for bigger projects, they are wary of having to partake the social cost of the organisation, which includes huge subsidies for providing transportation services. The concern is expressed not just by players like container train operators, but several railway officials as the organisation looks to attract private funding for its infrastructure.

SB Ghosh Dastidar, former Member-Traffic, Railway Board, stressed on the need to link passenger fares (particularly second class and sleeper classes) with a weighted average cost index every year through a Cabinet decision. This will help attain a break-even in the passenger segment, and help generate ₹40,000 crore of surplus. This surplus, in turn, can help fund 30 per cent of infrastructure.

Passenger fares (particularly second class and sleeper classes) should be suitably increased every year so that the passenger sector is able to more or less break even. Through a Cabinet Decision, ‘passenger fares’ should be linked to ‘Weighted Average Cost Index’ of Indian Railways and be accordingly reviewed every six months or one year, he said. “Such fares should not be allowed to be finalised by the Railway Board or Ministry of Railways arbitrarily or unilaterally,” Dastidar said.

Providing tickets and food has emerged as a space where private sector has been particularly keen to invest. So, apart from the Railways’ own subsidiary IRCTC, firms such as RailYatri, Google, Paytm, MobiKwik and Freecharge are tapping into areas that will help extend the gamut of services.

Kapil Razada, Co-founder of Railyatri, said: “safety, amenities and pricing” are more important than “delays and seat capacity”. The core issues are around passenger safety, better amenities at the station where we believe increased private participation may help, and of course a more competitive model for dynamic pricing on trains. In dynamic pricing, we have seen instances when Shatabdi fares get higher than airfares. “We believe that if these three are addressed, it will help train travel compete effectively with the other evolving modes for travel,” he stated.

The Railways continues to be one of the few government bodies that operate stations, maintains tracks, produces locomotives and coaches, runs trains and pays its wages and pension from the revenues. “For people in the field, a lot of attention goes into managing train maintenance and policy objectives, which prevent from attending to policy objectives stated at the board,” says Amit Kumar, Director, Pristine group, a firm that operates private freight terminals.