Finshots Daily Why Indian Railways struggles with privatisation
Feb 4, 2025
Discover the challenges Indian Railways faces in privatization, including limited private interest due to risks and the potential impact on fares. Explore the financial struggles rooted in high operating costs and a dependency on ticket sales. Hear about proposed solutions like fare adjustments and cost management for sustainability. Finally, learn how enhancing operational efficiency and adopting better accounting practices could attract private investment, drawing comparisons to China's successful rail system.
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Failed Privatization Attempt
- In 2019, the Indian government's plan to privatize 150 passenger train routes largely failed.
- Only two players remained in the final bidding round, one being the government-backed IRCTC.
Why Privatization Failed
- Private companies saw the deal as high-risk and low-reward due to high costs and revenue sharing with the railways.
- This lack of incentive led to the failure of the privatization plan.
Delhi Airport Metro Line
- The Delhi Metro's partnership with Reliance Infrastructure for the airport line failed due to high fares set by Reliance.
- DMRC had to take over, reduce fares, and restore ridership.