FDI & PPP in Railways: Union-Railway Ministry tussle set to intensify

The next few months are going to be eventful for railways. The govt is determined to bring in greater private participation in this public utility, but two of its biggest unions are opposing the move tooth and nail, embarking on a collision course.

Friday will see the first of the big all-India agitations against introducing foreign direct investment (FDI) and public-private partnership (PPP). The agitation is being spearheaded by the communist-backed All-India Railwaymen’s Federation, an umbrella group of 1.1 million railway employees.

AIRF along with Congress-backed National Federation of Indian Railwaymen (NFIR) are two of the biggest unions in the system, and both have made their intentions clear. They are not going to make it easy for the govt to ‘privatise’ railways.

As reported earlier, NFIR had torn into Modi govt’s policies on railways at a seminar on world transport unions held in Sophia (Bulgaria) in mid-August.

JR Bhosale, national treasurer, AIRF, said “We have had a meeting with Railway Board on Sept 8, and we will be meeting railway minister Sadananda Gowda next week. We believe the introduction of FDI and PPP will make Indian Railways sick. That is because, we believe FDI and PP would do nothing for railways’ core sectors that actually require rejuvenation.”

Union’s point of view: No FDI, plain common sense

According to Bhosale, the problem is that railways has not been getting adequate returns on several projects since 1952. “Look at out track system! Of the 63,000km of tracks, only 16% are saturated. We should be doubling these lines because the amount of time and fuel wasted due to congestion runs into several thousand crore. Instead, what we have been doing is constructing lines in areas, mostly rural, where there is hardly any returns,” said Bhosale.

Picking on the slow pace of electrification, Bhosle said that it was this aspect that should be given priority. “Look at the kind of money we are losing because of the diesel trains we operate. Money should be spend on electrification; tariff for power supply to the railways should be looked into so that we start saving money,” said Bhosale.

Railway ministry’s view: Numbers are all off-track

Railways minister V Sadananda Gowda, in his July 8 railway budget speech, highlighted one of the most depressing assessment of railway accounts in recent times. Railways, Gowda told Parliament, earned Rs 1,39, 558 crore, of which it spent Rs 1,30,321 crore as working expenses in 2013-14 fiscal.

On money required for big-ticket projects, Gowda said some ambitious dreams like the Diamond Quadrilateral Network—to connect metros with high-speed trains—and the 350kmph bullet train between Mumbai and Ahmedabad would require the kind of money railways just cannot imagine. The Quadrilateral network would require Rs 9 lakh crore and the bullet train Rs 60,000 crore at the current estimate. Add to that another Rs 5 lakh crore over the next 10 years to complete the ongoing projects.

The bleeding is compounded by the low fares in place. The loss per km per passenger has increased from 10 paise in 2000-01 to 23 paise in 2012-13.

In a system where safety isn’t anything to write home about, railways will be needing Rs 40,000 crore for track renewals, elimination of unmanned level crossings and building road-overbridges/road-underbridges.

Expert view by S.Ananthanarayanan, former FA&CAO, Indian Railways

I believe FDI or PPP is not required. Shortage of funds is not the limiting factor in capital works. It’s not that railways is short of money. We are unable to spend the total money allotted for various projects because of lack of contractors, equipment, materials, etc. And PPP has hardly been used in the railways and would not be an option for building developmental lines. Private investors will come in only where there is profit. The problem is railways has spread its resources very thin (on a large number of projects, most of which have been delayed). Important safety works have been delayed because of the time taken for getting permission, shortage of essentials like sleepers, materials and agencies that can construct these projects.