India's plan for public-private partnerships and investments in railways set to transform the sector

The Indian Railways is in for a massive makeover, rather a complete transformation. "India needs world-class railways and they need to be better than the airports," Amitabh Kant, CEO, Niti Aayog said during a press conference at National Media Center, while giving us a peep into the upcoming Public-Private partnerships in passenger train operations. Joining him is CEO, Railway Board, Vinod Kumar Yadav.

"This creates a win-win situation for Indian Railways as well as investors, by tapping into the potential of huge unmet demand in the passenger business. The private sector investment we are looking at is about Rs 30,000 crores," Kant further briefed during the press conference.

In alignment with Government's privatization and divestment plans in the long run, MoR expects both global as well as domestic investors to actively participate in the bidding process for these initiatives. Two major initiatives of seeking private investment namely include running passenger trains and re-development of railway stations.

A peep into the Railways 2.0

The infrastructure of Indian railways will meet private entities operating modern technology. This means quality trains, advanced technology, better service and a much better experience.

"We are looking at 109 origin-destination pairs, divided into 12 clusters requiring 151 trains...Our objective is also 50 railway stations," Kant said.

Kant further explained that the efforts are underway for transparent competitive bidding and some new, attractive routes based on huge unmet demand will be put out to run premium passenger services. In sync with the modernization vibe, the newly developed railway hubs will be called Railopolis.

Public-private participation, it's happened before

Any inclusive discussion on privatization has often turned into apprehensions to do with the government's redundancy. For those looking at the flipside of the private investment, CEO Amitabh Kant puts a lot of apprehensions to rest with the simple precedence of banks.

"It is like when private banks were set up in India. So many private players came in the banking sector. But that did not lead SBI to shut? Private investment will bring in newer technologies. It will create competition in the railway sector. The competition will increase efficiency and reduce fare in the long run," Kant clarified to both in-house and web-based participants during the conference.

Nominal hike in fares, experience overhaul

The request for a quotation has already been floated and the due date for applications is October 7, 2020. During Q&A, addressing the queries into the user charge proposed to be levied for the redevelopment of the railway stations, Kant assured that it will be a nominal amount for the user charge.

"It will be an affordable amount but it is important to levy if we are looking at world-class facilities comparable to airport infrastructure."

The logistics, in a nutshell

The project will have a two-stage bidding process, the first stage will comprise RFQ for pre-qualification based on financial capacity, 50 percent of the estimated project cost. There will be twelve clusters available for investment, namely, Chandigarh, Chennai, Bengaluru, Delhi 1& 2, Howrah, Mumbai 1 & 2, Jaipur, Patna, Secunderabad and Prayagraj.