That’s the standard technique of privatization: Defund, make sure things don’t work, people get angry, you hand it over to private capital.
Noam chomsky
In the late 19th and early 20th centuries, public transportation – especially electric streetcars – formed the backbone of American cities, with over 17,000 miles of streetcar lines operating in major urban centers. For decades, these systems were considered vital to urban life.
While the idea of using public funding is often labeled as socialist by the American right, public transportation infrastructure offers remarkable benefits such as reducing traffic congestion, improving air quality and maintaining sustainability.
However, by the mid-20th century, this public infrastructure was dismantled. A widely discussed conspiracy theory suggests that General Motor intentionally bought and shut down streetcar lines to promote car dependency, driving Americans toward a private transportaiton system based on automobile dependency.
Statistics support the extent of this shift: 90% of US households own at least one car each, with 25% owning three or more (as of 2021). Transportation costs are the fourth-highest household expenditure in US families, totaling $1.6 trillion annually. Comparatively, European households spend 5% less on transportation due to efficient public transit systems, many of which still use streetcars today.
India under Narendra Modi seems to be following an American-style playbook.
Indian Railways: A national asset in decline
Indian Railways, a 171 -year-old institution, is a cornerstone of India’s connectivity and mobility. With 24 million daily passengers, 19,000 trains, and 7,112 stations, IR is Asia’s second-largest and the world’s fourth-largest railway network. It plays a vital role in India’s economic and social development, fostering geographic connectivity, citizen mobility and commercial activity. As India’s largest employer, it supports 1.6 million jobs, including 400,000 contract workers.
In September 2014, the Modi government formed the Bibek Debroy Committee to reform Indian Railways. The Committee recommended 40 measures, including phasing out the separate Rail Budget, restructuring leadership and encouraging private participation. In November 2016, the 92-year-old Rail Budget was merged with the Union Budget. However, this move overlooked the complexities of railway operations – such as infrastructure, safety and modernization – that require focused attention. The impact of this decision is evident today, with Indian Railways performing poorly in terms of passenger safety in the last decade. The stats don’t lie. I discussed this in detail in an earlier article.
On the leadership front, In September 2020 the Railway Board chairman was appointed as CEO, introducing a corporate governance model. The Modi government began gradual railway privatization with the launch of the Lucknow-New Delhi Tejas Express on October 4, 2019, India’s first privately operated train managed by Indian Railway Catering and Tourism Corporation. By July 2020, plans were announced for private players to operate 151 trains on 109 routes, covering 5% of Express and Mail services. While locomotive pilots and guards remain railway employees, other staff will be private. Instead of complete privatization , the Government’s intention was to make Railways go through a piece-by-piece privatization.
Privatization plans faced strong opposition. On July 3, 2020, a nationwide protest saw 1.2 million workers participating, followed by further protests on July 16-17, 2020. In response, the government halted the tender for private train operations.
Meanwhile, rail accidents have sharply increased over the past decade. Less manpower is one of the reasons behind it. About 30,000 to 40,000 recruitments used to take place in railways annually. However, for the past decade, the Modi Government has been sitting on these appointments and the number of unfilled posts has risen past 300,000. Modi Government policies of delayed appointments, ignored safety measures and rising fares have undermined the railway’s reputation as a safe, affordable, and reliable mode of transport.
Aviation vs rail: a strategic shift
Indian Railways, a key public transport system, carried 8.5 billion passengers in FY 2023–2024, generating the rupee equivalent of $30.76 billion in revenue, with $8.77 billion from passenger services – a 9% increase from the previous year. With its monopoly on transportation in India, even transferring 10% of railway operations to the private sector represents a massive business and revenue opportunity for both government and private players ). However, it is politically sensitive as Railways is India’s largest employer. A direct approach risks political backlash in the short and long term for Modi. To navigate these complexities, the government has adopted an indirect approach promoting aviation as an alternative to reduce Railways’ monopoly.
Modi’s multi-billion-dollar vision for private transportation
Launched in June 2016, the UDAN (Ude Desh Ka Aam Nagrik) scheme aims to make air travel affordable by promoting regional connectivity, subsidizing low-cost airlines and developing infrastructure as an alternative to railways. Recently, the aviation minister announced the scheme’s 10-year extension and plans to build 350–400 airports over the next 20–25 years. However, building such a large number of airports requires significant land and infrastructure.
Indian Railways owns 486,000 hectares of land, making it the second-largest landowner in India after the defense sector. This land is increasingly being repurposed for non-railway projects, such as the Dharavi Redevelopment project led by Adani, which involved transferring Railway land in Matunga and Mahim for slum rehabilitation. Despite resistance within the railways to sub-leasing prime land, the transfer went ahead. Interestingly, On September 8, 2022, the Modi cabinet reduced the license fee on rail land from 6% to 1.5% for certain uses and extended lease periods from 5 to 35 years.
The Adani Group plans to acquire 20-25 airports as 30-35 Airports Authority of India-managed airports are set for privatization by 2025. Despite lacking experience, the Adani group won bids for six airports in 2019. It is now India’s largest private airport operator. The key question remains: who benefits from this privatization – citizens, the state, or others? “
How can airlines serve as an affordable public transport option for the most populous developing country, one that imports 80% of its energy needs? With the currency hitting all time lows against the dollar, state expenses are bound to rise.
Promoting air travel also conflicts with India’s Net Zero Carbon Emission goal by 2070. Modi’s dream of aviation inclusive of 1.4 billion Indians has a very high price. But who is gonna pay the bills?