Essential service workers arrive at a station in Mumbai as the government announces plans to privatize part of its rail network. Photo: AFP

India’s decrepit 167-year-old train network is about to embark on a new era of transportation under a $4 billion plan to privatize most of its passenger routes.

While today’s trains evoke wide-ranging memories for millions of passengers and are a brand ambassador for tourists from around the globe, the unpleasant odors associated with the overcrowded, aging carriages leave an indelible image.

Employing 1.3 million workers, Indian Railways is one of the few systems in the world that’s fully state owned. Despite bureaucratic lethargy, an indifferent attitude and a fierce lack of dedication, it is seen by most to be doing a good job of moving people safely and reasonably punctual, within its financial limitations.

The government is planning a major change to open the sector to private players. Similar moves over the past three decades in banks, telecom, insurance, and airlines, have helped users get better service, though at a higher price.

Private companies will be able to run 109 train routes on the existing system. They can procure and run 151 modern trains made in India, for a projected investment of 300 billion rupees ($4 billion). Indian Railways will provide guards and engine drivers.

“The objective of this initiative is to introduce modern technology rolling stock with reduced maintenance, reduced transit time, boost job creation, provide enhanced safety, and provide world-class travel experience to passengers,” the railways said in its statement.

The railway is one of few in the world that still uses electric, diesel and steam engines, of all shapes, sizes and vintage. While 93% of the trains run on broad gauge, it also has narrow, meter and standard gauge rails.

The faster trains run at 160 kilometers per hour – although tracks for 200km/h are under construction – and the average speed of express trains is 50km/h. An ambitious bullet train project with Japanese help is designed to run at 320km/h between Mumbai and Ahmedabad.

The new privatized services, envisaged to begin in April 2023, will run 109 trains both directions in 12 rail clusters across the country, including Mumbai, Delhi, Chennai, Howrah, Bengaluru, Chandigarh, Jaipur, Allahabad, and Patna. Each train will have at least 16 coaches.

Private operators will have to pay the railway fixed haulage charges, energy charges and a share of gross revenue and will be responsible for the financing, procurement, operation and maintenance of the trains.

The deal is expected to solve capacity shortages. Today, of 8.4 billion passengers, about 50 million remain waitlisted, indicating a shortage of capacity. The railway expects passengers to increase to 13 billion a year by 2030.

As more lucrative routes open up for the private sector, the railway is expected to reduce dependence on the government for funds to upgrade safety, comfort and punctuality.

Critics of the new project call it elitist, catering to the rich at the expense of the poorer masses. The railway says it currently provides one of the cheapest modes of travel, charging 0.39 rupees (0.005 dollar) per kilometer on average.

More than half the railways total 22 million passengers are suburban train commuters in cities such as Mumbai, Chennai, Kolkata, among others. They contribute just 6.4% of the railways’ revenue. Passengers traveling without air-conditioned comfort contribute half of the remaining number of passengers and revenue.

A whopping 29% of its revenue comes from 1.5% of the total passengers who travel in air-conditioned coaches. A test case has proved passengers will happily pay more for better service.

Tejas Express which runs between New Delhi and Lucknow and is managed by Indian Railway Catering and Tourism Corp is cited as a case. The train charges 2,450 rupees per seat compared with the ordinary non-air conditioned train charging 730 rupees for the same destination. It manages to fill up every two of three seats on average.

Balancing between providing luxurious comfort to the demanding affluent passengers and ensuring a cheap mode of travel to the poor has been a classic dilemma for the railway for years. It can’t upgrade services without raising user charges regularly.

For transport economists, Indian Railways is a classic case of cross-subsidization of services.

It has been running the Darjeeling Himalayan Railway, or the Toy Train, on a 2-feet gauge since 1881. The 88km route climbs from 100 meters above sea level at its base to 2,200 meters above sea level, along six zig-zags and five loops, to reach its destination.  

Even as it builds infrastructure for a high-speed bullet train with Japanese help, the world’s oldest steam engine, built in 1885, still pulls a passenger train from New Delhi.

Today’s commuters wade through smelly, sweaty overcrowded stations to reach their coach. Once inside non-premium carriages, they deal with faulty air-conditioning or noisy fans, dirty bed sheets or hand towels and substandard toilet facilities.

If the new project goes according to plan, the fourth largest rail network in the world may indeed be on track to transform the lives of commuters and enhance India’s reputation throughout the world.

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