Suresh Prabhu rules out privatisation of Indian Railways as it bears public service obligation

Railway Minister Suresh Prabhu has ruled out privatisation of the public transporter as it cannot ignore the common man’s interest and will have to bear the public service obligation.

The Indian Railways’ public services obligation are currently almost Rs 30,000-35,000 crore.

Asked whether in the long-run the railways will no longer be a low-cost common man’s mode of transport and will be more on the line of privatised, Prabhu said, “This cannot be done in India. The railways will have to continue to be the only...  I think the railways is a mode of last resort for common people for transportation and we will have to bear that burden as well as the responsibility.”

In an interactive session with PTI, he disapproved the idea of privatisation and said, “You cannot say railways’ problems will be solved by privatisation. The solution should be an outcome based approach. Very few railways in the world are privatised. Part of the UK railway was privatised. Who bought it? the Italian Railway which is controlled by the government of Italy. Government entity is buying it.”

He also said which private company will be interested to do this. “Do you think the private airlines will do kissan special airline. We are concerned about the people travelling on train.”

Highlighting the issue of the public service obligation, Prabhu gave examples of the worldwide practice and said, “Somebody must pay for that as it happens globally. When you are doing this public service, it is a public service. So somebody must bear the public service obligation. And this happens globally.”

He said railways in Europe get the public service obligation reimbursed from the main budget.

Japan, when they privatised railways, they undertook the responsibility to pay for the public service obligation.

Each country has a different system of accounting public service.

“I am very sure about it, we cannot ignore the common man’s interest, we have to do that. But the burden of that we providing that facility to the common people, if it is low cost, somebody must bear that public service obligation, that’s the philosophy,”.

Indian Railways has asked the NITI Aayog to look into the public service obligation aspect.

“We are also asking the NITI Aayog to look at public services obligation, how we should work it out. And in fact, when the budget was merged this was also one of the points.”

Today it is almost Rs 30,000-35,000 crore public services obligation.

Passenger service in railways is cross-subsidised from the freight earning. The Railways spend Rs 30,000-35,000 crore on an average in a year to run passenger trains but its profit is cross-subsidised from freight services.

“So, if you look at it, about Rs 2,000 crore, I will just generalise, will amount to one point of operating ratio. If the Rs 36,000 crore was paid to the Railways, it will be 18 per cent lower operating ratio than what it is today,” he said.

The Railways being the largest employer, the Seventh Pay panel burden was Rs 35,000 crore in 2016-17.

Describing the fiscal 2016-17 as an “unprecedented” year, he said, “It was a very difficult year for the Railways.  Probably one of the most challenging years.”

“In one year we have to take Rs 35,000 crore burden. And at the same time, first nine months were very bad because coal movement, steel, were down, imports were down, exports were down. Because most of the cargo that we collect, either takes to the port or off-loaded from the port. Despite that, we have been able to manage that.”

The railways carried about 1107.1 million tons, which is highest ever freight loading as against 1104.2 MT in 2015-16.