PRIVATISATION OF RAILWAYS -2

Don’t Destroy Indian Railways in the Name of Reforms 

Basudeb Acharia, Vice President, CITU 

Government of India under Prime Minister ship of Narendra Modi appointed a committee under the chairmanship of Bibek Debroy to recommend total privatization of Indian Railways. This committee has submitted its final report where various recommendations have been made for complete privatization of Indian railways. 

In 1956 Government announced an industrial policy where seventeen industries were reserved for central Government among which railway transport was one. Even in 1991, when Government of India completely overhauled the 1956 industrial policy resolution, eight industries were reserved for Government, of which railway transport was one. 

But, the move for diluting the public sector status through various routes started visibly since neoliberal policy of liberalization, privatization and globalization was adopted by the Govt in 1991. Contractorisation and outsourcing were the main vehicles of such move. 

In 2009 U.P.A –II Government published a position paper on Indian Railways. It stated that only railway operation is reserved for Government and other activities like design, finance, construction and maintenance can go to private. Even before that, railway had been made open for private sector as in operation of container trains. 

Though the Indian railways Act 1889 permitted non Government railways in India, the successive Governments after Independence followed the industrial policy of reserving railway transport for central Government. 

Modi Government initially told that operation would remain with railway even in the events of privatization but later on notification issued on dated 22.08.2014 announced that all the activities including operation would be opened to private sector. Subsequently the Government decided to allow 100% F.D.I in railways through automatic route. The reason put forward by the Government to allow 100 F.D.I in railways is that railways do not have resources for implementation of various projects and also implementation of Modi`s pet project of “running of Bullet train”. 

What should be priority for Indian Railways, Bullet train or expansion of railway network? Narendra Modi wants Bullet train in between Ahammedabad and Mumbai to start with. The estimates has been worked out, it requires approximately 1 lakh crore. With an estimated rate of return of 14%, every year Rs 14000 crore would come to Railways. What will be the fare to ensure 14% return on capital employed? it will be more than Rs 7000. Whether Aam Admi will be able to travel in Bullet train with such huge amount of fare. Modi`s dream for Bullet train is for richer section of people. There are a number of districts where there is no railway line. Our priority should be to take to Railway line to the area where there is no Railways. 

Indian railway is the biggest public sector entity. It has huge asset, infrastructure and land. Indian railway is 2nd biggest land lord in the country. There has been a persistent effort to privatize and outsource its various activities. The Government of India adopted neo-liberal economic policy in 1991. It has adopted new industrial policy to pave the way for disinvestment and privatization. Government of India appointed a committee under the chairmanship of Prakash Tandon to recommend implementation of neo liberal economic policy in Indian railways. In later part of nineties a committee under the chairmanship of Rakesh Mohan was appointed to recommend to the Government in regard to implementation of the recommendations of Prakash Tandon committee. Committee under the chairmanship of Rakesh Mohan, recommended to bifurcate railways on the basis of core and noncore activities. According to Rakesh Mohan committee the operation of passenger and freight traffic is the only core activity. The operation of train services should remain with the railways and other non core activities i.e manufacturing of rolling stock, workshop, hospitals and educational institutions, all this should be separated from railways and gradually be privatized. This committee also recommended out-sourcing of many activities and the number of employees be reduced to Nine lakhs. Although the railway Minister number of times pointed out that recommendations of Rakesh Mohan committee would not be Implemented but clandestinely, Ministry of railways / railway board started implementing the recommendation of the committee. Many of activities of perennial nature were outsourced during this period. 

Afterwards Narendra Modi Government came to power. Government started its program of diluting public-sector status of Indian Railways more vigorously and aggressively. While presenting railway budget for the year 2014-15, Railway Minister announced that Government would allow 100% F.D.I in railways. In order to implement neoliberal economic policy in the railways a committee under the chairmanship of Bibek Debroy was constituted. This committee submitted its final report to the Government. The committee`s main recommendation are as follows. 

The private sector will be allowed to run both passengers and freight train on the track laid down by the Government on the rate of fair and freight which will be decided by them. Railway regulatory authority will be formed to regulate freight and fare; the production units and workshops will be handed over to private sector and Indian railway manufacturing company will be created and operate independent of Indian railways. Maintenance will be handed over to the contractor. The present structure of railways will be restructured/ fragmented into number of independent companies. Railway board will be restructured. The social obligation of the railways will be dispensed with. The number of employees will be substantially reduced. The management and running of suburban services will be handed over to concerned state Government .Kolkata Metro rail will be separated from Indian railways. In place of present pension system long term bullet bond or Zero coupon bond will be introduced. Entire catering service will be privatized. This committee also recommended that the work of protection of railway property and security of railway passengers will be handed over to private security agency. 

Prime Minister Narendra Modi compares himself with Margaret Thatcher former Prime Minister of Great Britain. He is following her footsteps. After becoming Prime Minister Margaret Thatcher privatized entire Coal industries which were earlier under Government control. Then she divided the British railways into five companies and sold out these companies one after another. Narendra Modi also enacted legislation to allow private sector in Coal industries, which were nationalized in 1973 after the bitter struggle by lacks of Coal workers, 56 workers became martyrs in the struggle for nationalization of Coal industry. The Bibek Debroy committee’s Report, in essence, is the blue-print for privatization of Indian Railways. 

The report recommends the formation of Indian Railway Infrastructure Corporation (IRIC) to be a separate company and this will be delinked from Government, paving way for private sector’s entry. Open access to private sector in the infrastructure will encourage private sector to run freight and passenger trains in competition with Indian railways. The workshop and production units are integral part of Indian railways. If the production of rolling stock and their maintenance go to the private sector, the Indian railways will face immense problem in regard to running of freight and passenger trains. The budgetary support provided by the Government of India is consistently declining. In 1956 the Railways got full budgetary support, it has now come down to 28%. As a result of decline in budgetary support there is deceleration in growth. There were more than 3 lakh posts are vacant .Out of these 3 lakhs vacant posts, 30% are safety related posts. A running stuff has to work more than twelve hours because of the vacant post are not being filled up. There were more than 5 lakhs contract workers. The numbers of contract workers are increasing every year. 

Whether the entry of private sector will facilitate growth? Or whether this will severely hamper the expansion of Railway network? We have the experience of British railways after privatization. After privatization of British Railways, Government had no control over freight and passenger fare and also the railway services had been in mess. Once former Prime Minister Tony Blair commented “If you want to see the hell, you travel in British Railways” train service so much deteriorated. The people demanded re nationalization of British Railways. Now British Railways has been converted to a corporation. Committee has also admitted that in many countries railways have not been privatized and are under Government Control. They are not less efficient than where the railways have been privatized. 

The committee opined that liberalization is not privatization. Whether entry of new operators into railway operation is not privatization? The committee see it a viable option for encouraging growth and improving services. Whether there is no other option. ? Whether there is no scope to increase the market share of railways which has come down from 72% in case of passenger traffic to 30% and in case of freight traffic from 65% to 35 %. 

The railways play an important role in regard to development of a nation; in respect of growth in economic activities and industrialization, Indian railways is the lifeline for country. More than 2 crore people daily travel in railways. 80% of the passengers travel in sleeper class. They belong to poor and lower middle class section of the people. They are the agriculture labourer, migrant workers and other poor section of people. If corporate houses are allowed to run the trains and if the Government do not have any control over the passenger fair, substantial percentage of people belonging to this section will not be able to travel by the train. If the Government do not have control over rate of freight and if it is left to Independent railway tariff authority, this will result in increase of freight rates increasing further the burden on industries and common people. The expansion of railway network will hamper .There are areas which are not still connected by railways and this areas will be deprived of railway facilities. 

The committee considers the activities such as running of Hospitals and Schools, Catering, Real estate development, Manufacture of locomotives, Coaches, Wagons are the peripheral activities. All these activities should be handed over to private sector. If the manufacture of coaches and wagons and their maintenance are outsourced and handed over to private sector, how railways will have control over it, the rolling stock and their maintenance, thus there will be adverse effect on the efficiency of the system. 

The R.P.F and R.P.S.F are also integral part of railway system. As per report of the committee, the security of railway properties and the passengers will be taken care of by private security agencies. Then where R.P.F personnel of 60000 will go. Modi Government is now planning to privatize the entire system. This is not in the interest of our country but to protect the interest both foreign and domestic corporate houses. 

The construction organization has 23000 (Twenty three thousand) employees. Bibek Debroy committee has recommended that construction work should be handed over to autonomous organization like RVNL, IRCON or RITES. 

As the recommendation of the committee, Railway Hospitals being noncore should be leased to private sector for 30 years. 54000 para medical employees and 2600 doctors will have to give option for voluntary retirement if they have completed 20 years service and will be asked to give option either to remain as a private employee. The rest of the employees should also be asked either they want to work in private hospital. In any case their salary should be paid by only private sector. 

All the suburban services are making a loss to the tune of Rs 4500 crores and this is bound to be so to ensure make the daily railway travel to workplace and back affordable to people. The branch lines catering to the poor commoners are making a loss of Rs 1600 crores. The committee recommends that, they should be handed over to state Governments. The state Governments do not have experience in running them. They will hand over them to private sector. To start with, it should be a joint venture with state Government with the subsidy burden shared equally by Indian Railways and the state Government. In future the subsidy is going to be made available only to the BPL category and it would be Aadhar linked direct benefit transfer. This will finally lead to increase the railway fares for suburban travel for the mass of the common people. And also a large number of Railway workers will become surplus. They either can be redeployed or handed over to private sector. 

All group D posts would be abolished and no recruitment should be resorted to. They have started to implement this recommendation by postponing the group D recruitment scheduled to be notified in July 2015 to July 2016. Finally Railway Recruitment Committee will be wound up. 

Safety related retirement scheme is prevalent in IR for group D safety categories and drivers. There is a demand to extend and expand this scheme to many categories of employees. The committee Thus all the recruitments will have to stop recommends reviewing this even in case gang men and drivers to stop this process of recruitment. 

Due to privatization of Railways and abolition of vacant posts and rendering of large number of posts as surplus in core and non core activities the social justice in respect of reservation of employment in favour of SC, ST, OBC etc will come to an end. Already the contract employment is deprived of the reservation besides security of job and decency of employment. In Indian Railways there are 2,27,597 SC employees the percentage being 17.06%. There are 1,04,221 ST employees the percentage being 7.85%.This is as regards all categories from A to D as on 31-03-2014. 

Indian Railways is the fourth largest network in the world only next to America, China and Russia. It has a route kilometer of 65,808 as against 53,595 route kilometer at the time of independence. It runs 12,960 passenger trains and 8600 goods trains every day transporting 8397 million passengers and 1051 million tons of goods every year with 9956 engines, 2,45,267 wagons and 66,392 coaches. It has entered in to the club of few countries carrying more than 1 billion tons of freight. It is the largest land owner in the country with 4.55 lakh hectares. The book value of its assets is Rs 2 , 08,844 crores which is said as capital at charge. In 2014-15 it had a gross income of Rs 1,59,248 crores. With an expenditure of Rs 145970 crores it has a net Railway revenue of Rs 16452 crores. The operating ratio which is the percentage of expenditure over the income remained 91.8 in 2014-15. It remained less than 100 for most of the years. The cost per passenger kilometer being 57.76 paisa, it earns only 28.52 paisa ie 49.4% of the cost only is realized. As a result it incurs a net social service obligation of Rs 21000 crores. This, it meets from the freight earnings. Though the cost per net tone kilometer is 75.28 paisa it earns 123.27 paisa ie 163.7% of the cost is realized. In other countries passenger loss is subsidized by the Government. In India, it is met by cross subsidization. For example the operating ratio of Kolkata metro runs by Railway in 300%. The loss is made up by cross subsidization as the metro is within Indian railways. 

This shows that there is a great need for expansion of its network by new lines, doubling, quadrupling, laying dedicated lines etc. There is a great need for more coach, wagon, engine, factories to meet the demand. There is a great need for strengthening safety and upgrading the system by modernization. As white paper on Indian Railways in 2009 put “ since augmentation of capacity is a long gestation activity and needs more investment the demand is now met by optimum utilization of assets and manpower”. 

The myth has been broken, thanks to the policy of starving Railways for sufficient investment pursued by successive Governments. Though the IR is earning profit over all, it, by itself, cannot meet the investment needs of the large country. As Bibek Debray himself puts it, among the top ten countries, Railways are under the control of Government in eight. The two countries are US and Canada. Even in US the passenger segment is with the Government, the loss of which is met by Government. In China Government invests at least Rs 1.8 lakh crore every year in Railways. Worldwide, Governments also invest in railways in a regular manner. 

Indian Railways thus must remain under Govt control, if consistent modernization and expansion is to be ensured for the benefit of the people and national economy. Privatisation of railways will lead to this most essential services be made the easy route for profit making by private corporate, both domestic and foreign, and the people and national economy will suffer. 

Since 1991 successive Governments tried to implement neo liberal economic policy. Effort for privatization started since then. But the attempts to privatize were resisted by the workers and the people. Modi Government is bent upon handing over all the core and non core activities of the Indian Railways to the corporate houses. This policy is being vigorously pursued by the Government. This will destroy the Indian Railways. The need of the hour is to build up bigger struggle to save the Indian Railways from Ruination. 

August 2015