Corporatise Railways, do not privatise it, says senior IMF official

Rakesh Mohan, Executive Director at the International Monetary Fund and a votary of reforms in the railway sector, says he supports corporatisation of the Railways, but not privatisation.

“I am saying corporatise… I am not saying privatise...I don’t believe in privatising the Railways,” Mohan told Business Line in an exclusive interaction, while pushing for more investment in the rail sector.

Mohan, who recently submitted a report on the national transport policy, had also written a report stressing on railway reforms in 2001, when the BJP-led NDA Government was in power.

Mohan said, “You can have a holding company, which is a corporate. The holding company can have corporations under it — such as the dedicated freight corridor corporation (DFCCIL), Container Corporation of India (Concor), etc. That’s what China has done. They have corporatised the whole thing.”

He said India already had the “ingredients” to go on this path, citing the examples of metro rail organisations, DFCCIL and Concor, which are companies. “We have accepted this in principle, now corporatise the whole thing,” he added.

Referring to his earlier report, Mohan said, “What I said in 2001 was too threatening and new. But in the last 10-12 years, a lot has gone in the same direction.” He cited more examples from telecom and bridges “in terms of acceptance of general model in India”.

“Telecom was under the Department of Telecom (DoT). We first corporatised Delhi and Mumbai as MTNL. Then we corporatised BSNL...Even in bridges…UP corporatised the UP State Bridge Corporation in the mid-1960s, and UP State Bridge Corporation functioned much better,” Mohan said.

That said,The Railways currently runs manufacturing plants for both locomotives and coaches. “Why can’t that be run through a company? If you corporatise, these can be disinvested, modernised, have joint ventures with foreign firms…,” he said.

The former Deputy Governor of RBI also said corporatisation does not mean withdrawal of Government subsidy. On the contrary, he favoured higher investments into Railways.

“I am all for commercialisation. But, who says corporatisation in railways means there should be no subsidy? Roads are being done through public-private partnerships. But they also allow for subsidy to the extent of 40 per cent,” he said.

In 2000, the Government decided that there should be investment in roads. The Pradhan Mantri Gram Sadak Yojana and National Highways Development Programme followed. Most of these were built with public funds. Now, the Government just needs to invest in railways, Mohan said.

Mohan, however, indicated that there was scope for higher passenger fares. “More people travel on the roads in buses than in trains. They pay up, right? In fact, they pay more than what trains charge,” he said, adding “But, you can’t increase passenger fares without increasing passenger service”

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