Issues involved in involving private players in the railways are i Ownership and sharing of inf...........

Economic and Social Issues Liberalization, Privatization and Globalisation

India’s first private train, Tejas Express, was recently flagged off on the Lucknow-Delhi-Lucknow corridor. Ministry of Railways (MoR) has taken initiatives in various areas viz. network expansion, setting up of locomotive factories, induction of railway wagons, Station Re-Development etc. to attract private investment and participation. MoR has also set up two locomotive factories (one electric and one diesel) in Joint Venture with private players. Indian Railways has also inducted 150 rakes through incentive schemes by associating freight customers. In addition, 63 private freight terminals have also been commissioned to augment terminal infrastructure with private participation.Five Public Private Partnership (PPP) models of Participative Policy of MoR, namely Non-Government Railway (NGR), Joint Venture (JV), Customer Funded model, Built-Operate-Transfer (BOT) and BOT Annuity models have been formulated to attract private investment in Rail connectivity Projects. MoR has also planned private participation in operation of passenger trains by introducing around 150 modern rakes with the objective to induct ‘state of the art’ rolling stock to provide world class travel experience to passengers.

Issues involved in involving private players in the railways are

i Ownership and sharing of infrastructure

ii Conflict of Interest

iii Tariff Issues

iv High Regulatory Burden

Select the correct answer using the code given below

i. ii and iii only

ii, iii and iv only

i. ii and iv only

all of the above

none of these

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Explanation:

Issues involved in involving private players in the railways are

•Ownership and sharing of infrastructure: It is difficult to privatize a portion of the Railways’ operations as it is strongly vertically integrated.

•Conflict of Interest: Private participation has failed to catch up in the Railways because policy making, the regulatory function, and operations are vested in the same organization.

This leads to a clear conflict of interest when the policy maker and the regulator is also a competitor.

•Tariff Issues: Under the Railways Act, 1989, Central government is the competent authority to decide on tariff and not the private enterprises (such as IRCTC). Given the inability of the Railways to raise passenger fares in the past due to political compulsions, tariff management would be a critical issue.

•High Regulatory Burden: High costs and lower returns, policy uncertainty, lack of a regulator to create a level playing field, lack of incentives for investors and procedural/operational issues such as delays in land acquisition etc. have significantly restricted private sector participation.