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Railway privitisation - Shanmugam IAS academy in coimbatore
Railway privitisation


What’s in news?

Railway Minister Piyush Goyal rejected opposition’s allegation that the government is working to privatise the national transporter, but said the ministry will invite investments for new technology, lines and projects in national interest. 

Key data’s:

  • Replying to a discussion on Demands for Grants of the railways in the Lok Sabha, Goyal reeled out figures to claim that the Modi government has performed better than the UPA dispensation as far as boosting infrastructure and safety parameters of the national transporter are concerned. 
  • During his hour-long speech there were frequent protests by Congress members, with their leader Adhir Ranjan Chowdhury accusing Goyal of misleading the House. 
  • Goyal also defended the decision to discontinue the practice a presenting a separate railway budget in Parliament, calling them “political budgets” which were used to sell dreams of new trains and railway lines to people for winning elections. 

Bibek Debroy committee:

  • Bibek Debroy is a permanent member of the NITI Aayog.
  • A committee headed by economist Bibek Debroy has recommended corporatization of the railway board and separation of roles of policy making, regulation and operations suggesting that the ministry of railways be only responsible for policymaking.
  • The committee suggested forming an independent regulator for economic regulation and a railway infrastructure company that will own the railway infrastructure, thus de-linking both from the railways.
  • The railway board function like a corporate board for railways.

Advantage of Rail Privatisation:

  1. Improved Infrastructure:

It will lead to better infrastructure which in turn would lead to improved amenities for travelers.

  1. Balancing Quality of Service with High Fares:

The move would foster competition and hence lead to overall betterment in the quality of services. 

  1. Lesser Accidents:

Because private ownership is synonymous with better maintenance, supporters of privatisation feel that it will reduce the number of accidents, thus resulting in safe travel and higher monetary savings in the long run. 

Disadvantage of Rail Privatisation:

  1. Coverage Limited to Lucrative Sectors:
  • An advantage of Indian Railways being government- owned is that it provides nation-wide connectivity irrespective of profit.
  • This would not be possible with privatisation since routes which are less popular will be eliminated, thus having a negative impact on connectivity.
  • It will also render some parts of the country virtually inaccessible and omit them from the process of development.  
  1. Fares:
  • Given that a private enterprise runs on profit, it is but natural to assume that the easiest way of accruing profits in Indian Railways would be to hike fares, thus rendering the service out of reach for lower income groups.
  • This will defeat the entire purpose of the system which is meant to serve the entire population of the country irrespective of the level of income. 
  1. Accountability:
  • Private companies are unpredictable in their dealings and do not share their governance secrets with the world at large.
  • In such a scenario it would be difficult to pin the accountability on a particular entity, should there be a discrepancy.

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