PUBLIC , PRIVATE PARTNERSHIP OVER INDIAN RAILWAYS

By Rakesh Kumar

Indian Railways is the backbone of the socio-economic growth of India & described as the ‘lifeline of the nation’ . It is World's fourth largest and Asia’s second largest rail network. From a very modest beginning in 1853, when the first train steamed off from Mumbai to Thane (distance of 34 Km). Indian Railways have grown into a vast network of 6,909 stations spread over a route-length of 64,099 Km. It is the world's largest employer with over 1.4 million employees.
It plays an important role in binding together the dispersed areas and promoting national integration. During national emergency, IRs has been in the forefront in rushing relief material to disaster stricken regions.
Present Position of Indian Railway & Challenges ahead:-
Most of the Railway stations have been built over 100 years ago and are experiencing infrastructural inadequacies to handle the ever increasing passenger numbers. The Railway stations are also located in the middle of the cities and offer enormous scope for re-development. New passenger terminals are also being developed in cities where existing terminals cannot meet the future demand.
At present passenger trains manage an average of 40-45 kph, while freight just 25-30 kph. Due to the increasing containerization of cargo there has been a rapid increase in the need for movement by rail.
Market share of Indian Railways in overall freight business has reduced in the last few years. This is mainly because roads have captured subsequent freight business from railways due to some inherent advantages it offers, like last mile connectivity and low initial investment.
IR’s competition with the Road and Aviation is driving the railways to improve their infrastructure. Reducing cost of operation will require keeping with technology.
Railways Minister Mamata Banerjee presented “ White Paper” in the Parliament indicating the Railway’s present organizational, operational and financial status based on its performance in the last five years, which help understand the health of the Indian Railways better so that plans for corrective and constructive action for the future can be drawn.
Everyone knows that India is changing and changing rapidly. Indian Railways has been trying to keep pace with this change. Indeed Railways is making its own important contribution to this change. Today the people of India are eager for faster and inclusive economic growth. They want better connectivity, more employment opportunities. People of every region in every state want to see progress in agriculture, industry, trade and business, so that they and their children can live a better life. Indian Railways is a unique umbrella for creation of infrastructure for development and Vision to expand the network to reach development to every corner of the country. Rapid progress in industrial and agricultural sectors of the country has generated a higher level of demand for rail transport, particularly in core sectors like coal, iron and steel ores, petroleum products and essential commodities such as food grains, fertilizers, cement, sugar, salt, edible oils, etc.
The Indian Railways has initiated one of the most challenging growth targets for the coming year. Indian Railways “Vision 2020” document presented in the Parliament by the Railway Minister aims at massive addition to its route network, segregation of passenger and freight services into separate double-line corridors, raising the speeds of passenger trains from the current110- 130 kmph to 160-200 kmph on some routes, zero accidents and equipment failures. The vision 2020 also envisages the implementation of at least four high-speed rail projects to provide bullet train services at 250-350 kmph. there is a demand for laying 25,000 kilometers of new lines Indian Railways has remarkably transformed itself to set a bench mark in the global level. Minister says that journey in Railways became pleasant-fast, punctual, comfortable, clean and memorable.
Thousands crores only required required for already sanctioned projects such as new lines, gauge conversion and doubling of lines.
Investment is needed to improve track, rolling stock and delivery times performance and infrastructure. . Modernization and up gradation of the rail transport system to reduce costs and improve reliability, safety and quality of service to the customers. Estimated 14,00,000 crore is required upto 2020.
IR is not able to meet this demand due to financial constraints. Internal resources are not sufficient. A bold new approach for resource mobilization is needed.
Public Private Partnerships (PPPs) are an innovative way of delivering modern, high quality public services and is best suited for the infrastructure sector, promoting the country’s competitiveness. at the earliest”.
Ministry of Railways (Railway Board) set up an Expert Committee under the chairmanship of Dr Amit Mitra, Secretary General, Federation of Indian Chamber of Commerce and Industry ( FICCI) for developing business models and innovative funding techniques through Public Private Partnership (PPP) instruments has been constituted.
The Expert committee recommendations inter alia relate to setting up of multi functional complexes across Indian Railways by bringing in appropriate Private Equity, development of world class stations over Indian Railways through Public Private Partnership mode and setting up of locomotive and rail coach factories and rolling stock manufacturing, multi modal logistics parks, running of container trains etc through joint enture/private equity models. ”
The railway ministry has accepted the recommendations of the Expert Committee and has set up a committee to formulate strategies for faster action for the implementation of the same has been initiated on war level..
What is Public Private Partnerships (PPP) :-
PPP Project means a long term project based on a contract or concession agreement, between the Government or statutory entity on one side and a private sector company on the other side, for delivering an infrastructure service on payment of user charges. Typically, a private sector consortium forms a special company called a “special purpose vehicle” (SPV) to build, maintain and operate the asset. The consortium is usually made up of a building contractor, a maintenance company and a bank lender. It is the SPV that signs the contract with the government and with subcontractors to build the facility and then maintain it. Risk sharing is one of the most important features of a PPP. The PPP is most likely to succeed incorporate a risk mitigation framework that apportions risk in terms of capacity to bear. The risk mitigation framework is addressed through a bankable concession agreement that clearly delineates project risks and responsibilities.
Indian Railways develop infrastructure through PPP:-
Indian Railway invited State Governments, local bodies, ports and private sector to invest in rail projects. IR awarding projects through open bidding to make the entire process competitive and transparent.
The Ministry putting into place a dependable machinery to develop Public Private Partnerships (PPP) which includes lease service agreements, build-operate-transfer (BOT), straight licensing and build-operate-own-transfer (BOOT).
Indian Railways plans to utilize Public Private Partnerships (PPP) to build 50 world-class railway stations, kisan vision projects, network of optical Fiber Cable (OFCs), provide facilities for the manufacture of diesel and electric locomotives , coaches and wheels freight terminals, multi modal Logistics Park, warehouses, ICDs, port connectivity projects, high speed corridors etc. These initial steps will open an entirely new horizon for investments. The Indian Railways is also foraying into medical services with elaborate plans in place for setting up five super specialty hospitals in Mumbai, Delhi, Howrah, Patna and Chennai , multi modal logistic parks equipped with rail sidings with sheds, large inland container depots, warehouses for storage, and office buildings for logistics operators, highway connectivity, and assembly units for processing imported raw materials for export ,new routes, two locomotive manufacturing units one each for diesel and electric locomotives etc.
Pilot project started to upgrade retiring rooms, waiting rooms, station buildings, lavatories, etc. under public-private partnership schemes at a few stations, to be expanded further.
The rapid rise in international trade and domestic cargo has placed a great strain on the Delhi-Mumbai and Delhi-Kolkata rail track. Government has, therefore, decided to build dedicated freight corridors in the Western and Eastern high-density routes. The investment is expected to be about Rs. 22,000 crore.
IRCTC is also commissioning new Food Plazas, call centre,100 Budget Hotels in Railway premises with private participation.
Rail Land Development Authority has been established recently to encourage and monitor PPP projects. The Indian Railway has offered over 500 acres of land to private developer on lease for infrastructure development. to increase earnings across the country for the development of railway stations, freight terminals and rail link projects etc.
The initiative will utilize the trains as property to generate revenue. Brands taking up this property will improve the passengers' travel experience and create goodwill.
IR must care:-
IR must care that PPP models are to be prepared after the expert consultant and monopoly of the railway to be maintained. Safety of the passengers are not to be compromised at any cost. Non-critical areas in the Indian Railways should be identified and private sector participation should be allowed in the same. The Indian Railways should focus on the core activities of running and operating the trains.

(Won Ministary of Railways All India English Essay competition Award(second Prize)year 2010,Essay also published in Indian Railway magazine INDIAN RAILWAY JULY 2010 ISSUE)