{"id":53130,"date":"2019-10-15T17:24:41","date_gmt":"2019-10-15T11:54:41","guid":{"rendered":"https:\/\/blogadmin.forumias.com\/?page_id=53130"},"modified":"2019-10-15T17:24:50","modified_gmt":"2019-10-15T11:54:50","slug":"answered-critically-analyse-the-need-and-various-fallouts-of-privatisation-of-indian-railways-do-you-think-such-a-move-will-further-displace-the-poorer-sections","status":"publish","type":"page","link":"https:\/\/forumias.com\/blog\/answered-critically-analyse-the-need-and-various-fallouts-of-privatisation-of-indian-railways-do-you-think-such-a-move-will-further-displace-the-poorer-sections\/","title":{"rendered":"[Answered] Critically analyse the need and various fallouts of privatisation of Indian Railways. Do you think such a move will further displace the poorer sections?"},"content":{"rendered":"\n
Demand of the question<\/strong>
Introduction. <\/strong>Contextual Introduction.
Body. <\/strong>Need and fallouts of Ray privatisation. Concerns for poor and common man.
Conclusion. <\/strong>Way forward. <\/td><\/tr><\/tbody><\/table>\n\n\n\n

The Indian Railways is among the world\u2019s 3rd largest rail networks. At present, several domestic and foreign companies are also looking to invest in Indian rail projects. So far, the private sector\u2019s participation in railways has been very less in India, compared to sectors like ports, telecom, electricity, airports and roads. <\/p>\n\n\n\n

Need of Privatising Indian Railways:<\/strong><\/p>\n\n\n\n

  1. The Indian Railways is one of the\nfew government-owned enterprises which is incurring losses year-after-year.<\/li>
  2. Indian Railways has not been able to\nkeep pace with modernisation of its infrastructure and services and has not\nbeen able to expand at the pace and coverage that a country like India needs.<\/li>
  3. Almost all arms of the railways\nrequire modernisation of equipment, processes and training, all of which are\nstill continuing as they have been, through the decades. The result is that the\nrailways continue to be a drain on the exchequer, while continuing to provide\nvital services inefficiently.<\/li>
  4. Freight fares in railways are kept\nhigh to cross-subsidise the passenger segment. Rail Development Authority has\nbeen approved to determine rail fares to enhance affordability and utilise\ncapacity in an efficient manner.<\/li>
  5. Railways owns large tracts of land\nalong its tracks, in various parts of the country and this can be optimally\nmonetised by inviting private players to invest, build and manage properties\nthat may be developed on these lands.<\/li>
  6. A strong argument in favour of privatisation\nis that it will lead to better infrastructure which in turn would lead to\nimproved amenities for travellers. <\/li>
  7. Private ownership is synonymous with\nbetter maintenance, thus it will reduce the number of accidents, resulting in\nsafe travel and higher monetary savings in the long run.<\/li>
  8. The main argument for privatisation\nis that private companies have a profit incentive to cut costs and be more\nefficient. A private firm is interested in making a profit, and so it is more\nlikely to cut costs and be efficient.<\/li>
  9. It is argued that a private firm has\npressure from shareholders to perform efficiently. If the firm is inefficient\nthen the firm could be subject to a takeover. A state-owned firm doesn\u2019t have\nthis pressure and so it is easier for them to be inefficient.<\/li><\/ol>\n\n\n\n

    Various fallouts privatisation of Indian\nRailways:<\/strong><\/p>\n\n\n\n

    1. An advantage of Indian Railways\nbeing government-owned is that it provides nation-wide connectivity\nirrespective of profit. This would not be possible with privatisation since\nroutes which are less popular will be eliminated, thus having a negative impact\non connectivity.<\/li>
    2. Given that a private enterprise runs\non profit, it is but natural to assume that the easiest way of accruing profits\nin Indian Railways would be to hike fares, thus rendering the service out of\nreach for lower income groups. This will defeat the entire purpose of the\nsystem which is meant to serve the entire population of the country\nirrespective of the level of income.<\/li>
    3. Private companies are unpredictable\nin their dealings and do not share their governance secrets with the world at\nlarge. In such a scenario it would be difficult to pin the accountability on a\nparticular entity, should there be a discrepancy.<\/li>
    4. This move would render thousands of\nrailway employees in production and ancillary units jobless in the long run.<\/li>
    5. Privatisation creates private\nmonopolies and thus, it needs regulations to prevent abuse of monopoly power.<\/li>
    6. To please shareholders, the private\nplayers may seek to increase short term profits and avoid investing in long\nterm projects. For example, the UK is suffering from a lack of investment in\nnew energy sources; the privatised companies are trying to make use of existing\nplants rather than invest in new ones.<\/li><\/ol>\n\n\n\n

      Related concerns for a poor people: <\/strong><\/p>\n\n\n\n

      1. In the long-run, privatisation of\nrailways may no longer be a low-cost common man’s mode of transport and will be\nmore on the lines of privatised services.<\/li>
      2. As fares will increase, it will put\npressure on poor people who can\u2019t afford hike in prices.<\/li>
      3. It would hinder health and market\naccess to poor, and will put extra burden on them.<\/li>
      4. Also it is against farmers, as it\nwill lead to increase in cost of transportation putting extra burden on them. <\/li><\/ol>\n\n\n\n

        In order to keep Indian Railways affordable for the lower strata of the society (post privatisation), the government must offer subsidies and tax incentives to companies that would provide low cost services, similar to low cost airlines, to these very pocket of population. This in the long run would make railway network more efficient and affordable.<\/p>\n","protected":false},"excerpt":{"rendered":"

        Demand of the question Introduction. Contextual Introduction. Body. Need and fallouts of Ray privatisation. Concerns for poor and common man. Conclusion. Way forward. The Indian Railways is among the world\u2019s 3rd largest rail networks. At present, several domestic and foreign companies are also looking to invest in Indian rail projects. So far, the private sector\u2019s… Continue reading [Answered] Critically analyse the need and various fallouts of privatisation of Indian Railways. Do you think such a move will further displace the poorer sections?<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":49132,"parent":0,"menu_order":0,"comment_status":"open","ping_status":"closed","template":"","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-53130","page","type-page","status-publish","has-post-thumbnail","hentry","entry"],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/53130","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=53130"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/53130\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/49132"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=53130"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}