Indian Railways pulls emergency brake on the first round of privatization bid

• Follow

The first round of the privatization bids of Indian Railways has gone off track owing to operational hurdles and poor response from bidders. The dwindling passenger traffic due to the Covid-19 has also created a big challenge for the Indian Railways to go ahead with its ambitious plan.

In addition to this, the fixed costs which are expected to keep on growing have put an end to the private rail tenders.

As per sector observers, these trains offered to the private operators were expected to compete on popular routes with high-speed trains like Rajdhani Express, which is one of the most popular trains operated by the Indian Railways. Private players can compete with the trains run by Indian Railways in terms of speed and efficiency, but they will find it very hard to match their fares.

Another deterrent for the private players was the absence of an independent regulator to ensure a level playing field.

Lackluster bidding process

In July 2020 then Railway Minister Piyush Goyal announced the ambitious project of the Indian Railways inviting private players to run trains. The Ministry invited private players to operate 109 pairs of trains.

In October last year the ministry received 120 bids in the initial round by 15 firms for 12 clusters. Out of these 102 applications were found eligible for the Request for Proposal round. However, subsequently the ministry received only two bids.

As per officials, IRCTC found difficulties in securing funds for the private train operations. It engaged in early level talks with certain PSUs like BHEL to fund these operations. However, they did not materialize and IRCTC later put out an open offer for anyone who wants to extend financial support for running private trains. These attempts also failed and IRCTC couldn’t raise anything.

The bidding process for the private train operations coincided with the lock downs due to COVID-19. IRCTC’s experience with private operations was closely observed by other firms who felt that they might get an unfair deal. This could be largely attributed to the lack of an independent regulator to ensure fairness and equal footing both private as well as government-run trains.