Should Govt give up running the Railways?

Indian Railways began their chugging career more than 150 years ago and have become one of the largest railroad networks in the world, with a turnover of over $17 billion (2011-12). It is government owned and employs the largest number of Indians in a single government enterprise, with a net work of over 115,000 kms. And it ferries 24 million passengers a day. Apart from extensively covering India, it has limited service to Nepal, Bangladesh and Pakistan.

Despite its huge net work and potential, there is no doubt, prima facie, that Railways are not run in an enterprising fashion to earn profits and act like many other successful government companies, some of which have huge and surplus cash reserves.

For beginners, almost every of its project has cost over runs and delayed completion by several years. For instance, Udhampur-Srinagar-Barmullah railway project started in 1955 with an estimate of  Rs2,500 crore. Its cost have now run to a staggering Rs17,500 crore and it is still not completely finished. Delays in project are created by vested interests leading to increase in costs and corrupt practices. Political agitations and terrorist activities across the border, as in the case of some of the affected areas, may be “treated” as force maejure conditions, on which the contractor has no control, but where such conditions do not exist, it is purely due to other reasons cited above.

Some other prominent projects, such as for the Kudankulam Power plant, approved in 2001 costing Rs4,099 crore eventually cost Rs13,171 crore; the oldest, said to be the Howrah-Apta-Champadanga line was estimated to cost around Rs34 crore reached Rs550 crore – the list is endless.

In 2011-12, it was reported that the Railways carried 2.8 million tonnes of freight daily and now they are closer to reach 3 million tonnes. However, there is regular shortage of rakes for moving bulk cargo like coal, iron ore etc. In case of coal, in fact, the Railways, in order to ensure timely supply of coal to industries from pit heads to the manufacturers sidings, have also began to lay dedicated corridors in some areas to ensure collection and delivery. They move bulk supply of foodgrains as well, both of which are subject to wastage and pilferage, but these may occur at any point of time but the pity is that the Railways have not yet been able to come out with a pilfer proof wagon that can carry precious cargo.

Read the full report here, Money Life


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