The Railways

Fast-tracking privatisation

Print edition : August 04, 2017

Visakhapatnam railway station, adjudged as the cleanest among the 75 A1 category stations in the country, is one of the 23 that are going to be privatised in the initial phase. Photo: K.R. DEEPAK

Railway Minister Suresh Prabhu inaugurating the free wi-fi service at Mumbai Central Station on January 1, 2016. Photo: Prashant Nakwe

Makeover plans for the Secunderabad station, revealed at a press conference in Secunderabad on February 9. Photo: G. RAMAKRISHNA

Workers cleaning wagons at KSR Bangalore railway station. A lot of routine work in railway stations has already been outsourced to private players. Photo: K. MURALI_KUMAR

Select railway stations, along with prime land belonging to them, are to be leased to private operators in one of a series of steps aimed at handing over the Indian Railways on a platter to corporate players who are not bound by labour laws.

PRIME real estate, in the form of government land owned by the Indian Railways, is up for grabs. And it is being given away by the government itself. The Railways recently announced a station redevelopment programme, to be taken up through a public-private partnership (PPP), which was expected to bring in investment to the tune of Rs.100,000 crore. On the face of it, it seemed like a good idea to generate non-tariff revenues for the fledgling finances of the Railways. But the finer details of the programme sent alarm bells ringing. It involves the leasing of 2,200 acres (one acre is 0.4 hectare) of prime real estate across 100 cities. The station area and the land around it in the selected stations will be given to private players on lease for a period of 45 years. A station facilitation manager (SFM), who will be the representative of the contractor, will manage the entire railway station and all its commercial activities except the core function of running the trains. The land for commercial development will be “encroachment free”, with clear titles.

Railway stations in India sustain an ecosystem which goes far beyond their mandate. They do not intimidate even the most marginalised. The poorest travel in the general compartment. This move to privatise stations will have a far-reaching impact on the lives and livelihoods of thousands of people connected to the railway system. To begin with, all existing railway staff involved in commercial activities of the stations will have to be transferred out. The SFM’s staff, that is, private employees, will take over, according to R. Elangovan, vice president of the Dakshin Railways Employees Union.

There are 7,600 stations under the Indian Railways. Of them, 75 are categorised as A1 (earning more than Rs.60 crore per annum) and 332 as A (earning more than Rs.8 crore but less than Rs.60 crore). The programme envisages converting the A1 and A stations into world-class ones. The idea of building world-class stations was first mooted eight years ago by the then Railway Minister Mamata Banerjee. Phase 1 of the programme, which began in February this year, includes 411 stations. Phase 2 will involve 100 stations and Phase 3, another 250. As of now, applications have been invited for 23 stations. These include Allahabad, Mumbai Central, Bandra Terminus, Bengaluru, Bhopal, Yesvantpur, Faridabad, Secunderabad, Pune Junction, Kozhikode, Thane Junction, Udaipur, Ranchi, Vijayawada, Lokmanya Tilak Terminus (Kurla, Mumbai), Kamakhya, Kanpur, Howrah, Indore, Jammu Tawi, Borivali, Visakhapatnam and Chennai.

Bidding process

Habibganj station, near Bhopal, was the first one off the block, with the contract for redevelopment going to the Bansal Group, which is primarily into the education sector. The process of bidding will involve the Swiss Challenge method, where a party with credentials can submit a proposal online and other parties will be invited to improve upon that. Whichever party is able to outline a better proposal at the lowest price will bag the contract. The Bansal Group received 17,245 sq m of land in four parcels on lease for 45 years through this process. It plans to develop an office-cum-shopping complex, a multispeciality hospital, a budget hotel and a five-star hotel. Additionally, it will have to maintain and operationalise the station for eight years. While the Habibganj project is being touted as a landmark one by the government, others pointed out that it was already a well-maintained and clean station.

“What is the point of redeveloping a station that already performs well? They should have taken up the Bhopal Junction for improvement,” said a resident. Habibganj station earned Rs.8,110.94 lakh in 2014-15. Redevelopment plans for other stations include building spas and helipads on the grounds. “Which traveller comes out of a suburban railway station and jumps straight into a spa? This notion of what development means is highly problematic and is bound to fail,” said another resident.

The project will come under the aegis of Indian Railway Station Development Corporation Ltd (IRSDC), a special-purpose vehicle formed by Ircon International Ltd (IRCON) and the Rail Land Development Authority (RLDA) to undertake station redevelopment projects. The visions and plans document released by the Railway Ministry in January this year talks of redeveloping stations by leveraging different approaches such as PPPs including the Swiss Challenge model, collaborations with the Ministry of Urban Development and State governments, and nomination to public sector units. It also states that 30 of the most profitable pieces of land will be prioritised for monetisation in the next two years; that goods sheds will be shifted from city municipal areas; that released prime land will be used for real estate development and for the development of modern commercial or hospitality complexes; and that satellite passenger terminals will be developed through monetisation of land assets. Two things are common in all the plans: releasing of land from the government and greater say for a private player.

Apart from getting land on lease, a contractor will also have certain responsibilities. He/she will have to take care of housekeeping; landscaping; maintenance (park, beautification, etc); garbage collection, segregation and disposal; solid-waste management; reporting; pest and rodent control; disinfection; help desk management; facilities for differently abled people; installation, operation and maintenance of equipment and facilities as per joint inventory; parking; advertisements outside the rail display network area; retail (all existing stalls will come under their monopoly control); repair and maintenance of station assets (buildings, platforms and their shelters, roads, parking area, subways, etc.); provision of waste water collection, treatment and disposal system and its maintenance; water supply system and its network; and repair and maintenance of the electrical substation and power supply system. The SFM will also be responsible for the payment of all the usage charges relating to electricity, water required for the smooth operations of the station area handed over to them, and any other taxes and charges relating to station operations.

However, railway operational activities such as train operations, parcel handling and ticketing including platform ticketing, passenger and goods movement, overhead traction, signal and telecommunication, and track works will remain with the Railways.

Fast-forward mode

The process of privatising the Railways had actually begun much earlier, said A.K. Padmanabhan, vice president, Centre of Indian Trade Unions (CITU). In August 2014, the government notified foreign direct investment (FDI) in suburban corridors through PPP in high-speed train projects, dedicated freight lines, rolling stock (including train sets and locomotive coaches manufacturing and maintenance facilities), railway electrification, signalling system, freight terminals, passenger terminals, infrastructure in industrial parks pertaining to railway lines/siding, and mass rapid transport systems. Two locomotive factories, at Madhepura (electric) and Marhowra (diesel), both in Bihar, costing about Rs.2,600 crore entailing FDI inflow in rolling stock manufacturing, were given to Alstom and General Electric (GE) respectively in 2015. “FDI in the strengthening and modernising of the railway network indirectly contributes to safety improvement,” said Rajen Gohain, Minister of State for Railways, in response to a question in the Rajya Sabha on April 7.

Said A.K. Padmanabhan: “It is a continuous process that started in 1991. It is just that neoliberal policies have been put on a fast-forward mode by this government now. After 1991, for the first time a party [the Bharatiya Janata Party] has an absolute majority in Parliament and their 2014 election promise was that they would get rid of the ‘policy paralysis’. That is exactly what they are doing. It is not just the Railways. From banks to insurance companies to defence production, they want to finish off public assets through disinvestment systematically.”

Since the Railways is a behemoth, it is impossible to sell it to any one person; no one would come forward to buy it as well. Since outright strategic sale was not possible, handing over the stations was one part of it, he said. But the process of outsourcing railway work has been going on for a long time now.

Design, finance, construction and maintenance including production activities have already been outsourced or privatised. For instance, the production of wagons for the Railways, except in certain workshops, has been privatised completely. Many activities in the coach and engine production units have been opened for outsourcing. In the name of fitting central buffer coupling and bio-toilets, both works have been privatised and they are carried out within the workshop’s production units, maintenance sheds and yards.

The power cars for Shatabdi and Rajdhani trains have been outsourced and are manned by private staff. Entire construction activities, like laying of railroads and construction of buildings, have been outsourced. Laying of signal lines and installation of telecommunication equipment, along with their maintenance, have been outsourced. Cleaning and washing of stations and coaches, onboard cleaning in running trains, cleaning of engines in sheds, and onboard housekeeping including providing linen have been outsourced. Providing water in coaches has been outsourced. Many private ticket counters, for both reserved and unreserved tickets, have been opened. Catering in both onboard and stationary units has been privatised through the Indian Railways Catering and Tourism Corporation (IRCTC).

Eight lines connecting private ports and industrial estates have been privatised through the PPP route. Many more are being added to the PPP route. But the operation of trains in these routes is with the Indian Railways. Container trains are run by the container corporation of the Railways, shares of which have been disinvested to the extent of 37 per cent.

“When Lalu Prasad was the Railways Minister, he allowed 15 private container operators to run container trains along with the Railways’ container trains, the operation of which rests with the Railways. Now, the Indian Railways has decided to allow private goods trains on the same pattern of container private trains, the operation of which will be with the Railways. The Cabinet has approved disinvestment in certain public sector units under the Railway Ministry, such as the IRCTC, the IRFC and the IRCON. In the Railways’ hospitals, doctors and paramedical workers have been appointed on contractual basis. Maintenance of buildings, including railway quarters, has been outsourced. More than seven lakh private employees are involved in such outsourcing. Even the government-stipulated minimum wage is not paid to them. Labour laws are not implemented. There is nobody to organise them,” said Elangovan.

New regulatory body

In line with the Bibek Debroy Committee recommendations, the Railway budget was made part of the general Budget in order to pave the way for qualitative privatisation. The Cabinet, in April this year, decided to constitute the Railway Development Authority (RDA) by an executive order, without amending the Railway Act. This authority will allow access to private train operators in both passenger and goods segments to run trains on existing tracks. Operation of trains will go to private hands, said Elangovan. “They will be provided a level playing field, meaning prime-time trains will be shared with them. Many of our present trains may go to private players. The authority will decide the fare and freight charges on a cost basis. At present, passenger fare is charged at only 53 per cent of the cost. Therefore, the fare will go up by 47 per cent. This will pave the way for more private trains. Private operators will be allowed to use the Railways’ facilities such as yards, sheds and workshops for maintenance of their coaches, wagons and engines. There will be private drivers and guards and ticket examiners, apart from other category staff on lower wages. The authority will come into force before August 31, 2017.”

It is just a matter of time before the largest public transporter in India, the Railways, is handed over, bit by bit, to private and unaccountable hands as the government fast-forwards the process of privatisation.