Pushing ahead with Privatisation of Indian Railways

Submitted by cgpiadmin on Sat, 20/02/2016 - 12:00

In the last Railway Budget presented by the Railway Minister, Mr. Suresh Prabhu on February 2015, he had announced that Rs 8.5 lakh crores would be raised to augment the capacity of the Indian Railways and modernize its infrastructure. It was announced that this would be raised through private sector participation as well as direct foreign investment (FDI).  This plan was in line with the policy of the previous UPA government as well as the present Narendra Modi government, of increasing reliance on private capital to fund infrastructure in roads, power, telecom and now in railways. In fact, it was widely understood that Mr. Prabhu was made Railway Minister by Narendra Modi in November 2014, replacing his predecessor, Mr. Gowda, who was perceived as not moving fast enough with the plan of  privatization of the  railways!

Privatisation, piece by piece – in the name of “improving” the functioning of the Railways

It may be recalled that in September 2014, the Indian Railways had appointed the Bibek Debroy Committee to give recommendations on improving the finances of the Indian Railways. In its report submitted in June 2015, the Bibek Debroy committee recommended corporatization of the railways and that the Railway Ministry of the government should be involved only in policy making, while private players should be allowed to run passenger and freight operations. When the railway workers led by their trade unions unanimously rejected these recommendations and threatened to go on strike to show their opposition, the government was forced to back track. The Railway Minister then said that “Railways will continue to be owned by the Government of India, managed by the Government of India. We want change not for the change in ownership…We want to bring in private capital or technology to improve the functioning of railways . . .” However, behind all the talk of “improving” the functioning of the Railways, what is being hidden is the fact that the actual plan is to hand over the ownership of the Indian Railways, piece by piece, to private capitalists.

Assured returns for private capitalists

On October 24th 2015, the Railway Minister addressed a meeting in Singapore, organized by the Singapore government and the World Bank. At that meeting he declared that “Private players can participate in upgradation and horizontal expansion of stations including construction of malls, laying new tracks, creating separate freight and passenger corridors to reduce decongestion etc. by adopting equity route and work with Indian companies on zero risk basis with assured financial returns”.   This means that he is guaranteeing Indian and foreign capitalists of assured profits with zero risk, for investment in the Indian Railways. This is music to the ears of every capitalist, Indian and foreign.

The Railway Minister has announced, over the past one year, that he intends to raise the Rs 8.5 lakh crores announced in the February 2015 budget (a) from LIC and World Bank (b) by handing over 400 select railway stations all over India to private companies for redevelopment (c) other means of converting railway assets to money.

The Indian Railways signed an MOU with LIC in March 2015, for a loan of Rs 1.5 lakh crores to the railways over the next five years to fund increased rail capacity. However the condition for these loans laid down by LIC is that they will be used only for financially viable projects which will ensure an annual rate of return of at least 14% every year!

Maximum returns with minimum investment

To increase its capacity, Indian Railways can either (a)build new Railway tracks in places where there is no rail connectivity-- however in this case, the returns will be low or (b)build additional tracks alongside already existing tracks which are congested by heavy traffic (this is called “decongestion”) and  in this case the returns will be high.

Since the Railway Minster as well as lending agencies want “maximum returns with a minimum of investment” it is clear that they will choose alternative (b). However this is a typical profit centric method of investment which is totally in conflict with the needs of the Indian people in various parts of the country. After Independence, the route length of the Indian Railways stood at 54,000 kms, while today it is at 65,000 Kms , with the addition of only 10,000 kms of new routes. However the track length has increased to 1,15,000Kms, by laying additional tracks along  the existing routes. While it costs Rs 10 crores per km to build a new railway line, it costs only Rs 6 crore per km to add a new line along an existing track.  Major portions of our country still do not have rail connectivity. Providing rail connectivity to the hinterland regions would assist in development of those regions and greatly benefit the people there, and would prevent the overcrowding of the metro cities currently taking place. Such investment, though capital intensive, will not yield high returns in the short term but will be advantageous in the long term for all round development of the economy as well as the different states of India. However successive governments have followed the shortsighted policy of maximum returns with minimum investment.

With this in mind, the Railways identified 24 routes where additional tracks would be laid to “decongenst” the existing routes. The identified corridors include the Golden Quadrialteral, Howrah-Chennai, Delhi-Howrah, Howrah-Mumbai, Delhi-Chennai, Chennai-Mumbai and Mumbai-Delhi. This means that additional tracks will be laid along the existing rail lines. The entire LIC loan will be utllised for decongestion and not for creating new rail lines.

Also the loan of LIC is at a concessional rate approved by the Reserve Bank. Hence the utilization of these funds on profitable routes will further increase the revenues of the railways.

In the second week of January, 2016, the Railway Minister went on a three day visit to USA to make a presentation to the World Bank and attract investments. He had claimed that a major part of his 8.5 lakh crores would be coming from this imperialist dominated institution. He claimed World Bank has agreed to invest money in Indian Railways, but the details are not being disclosed.

Earlier on 30th of October 2015, the Railway Minister was in London and addressed top British Financial Corporation chiefs. Again, details of what was promised and what was obtained are being kept a secret.

The much talked about “bullet train” -- more and better rail services for the masses is not the priority

During the visit of the Japanese Prime Minster, Mr. Abe to India in late December, 2015, the details of the Indian Railways plans to introduce a  “bullet” train from Mumbai to Ahmedabad, at a cost of nearly Rs 1 lakh crores, was announced. This project had also been announced in the last Rail Budget of 2015. Japan has offered a 50 year loan at 0.1% interest for 80% of the cost of the project, with a moratorium for the first 15 years. The Indian Railways expects the bullet train project to be running in seven years. However what is being hidden is that this bullet train will serve only the rich, because the one way fare between Mumbai and Ahmedabad will be around Rs 3,000, comparable to flight travel. The maximum number of people who are expected to use this service is around 50,000 people per day ,whereas the Indian Railways carries 25 million people per day, hence only  0.2% of the travelling public  will be using this bullet train. The question which the Railway Minister refuses to answer is why is so much money being spent on a service which will cater to 0.2% of travelling public, when the masses of people across the country have been demanding more rail services for the parts of the country where train service is either woefully inadequate or non-existent, as well as better services on the existing routes. 

The first batch of 30 DRM’s (Divisional Railway Managers) has already been sent to Italy for specialized training in High Speed Train Operations during the month of September 2015. These have been selected from the areas identified for the introduction of high speed trains. The officials would be trained on the various aspects of making tracks fit for running high-speed trains, their maintenance and security aspects. The railways has decided to introduce high-speed trains on Mumbai-Ahmedabad, Chennai and Lucknow-Delhi routes in the first phase. A survey of railway tracks on the above-mentioned train routes has already been made by a joint team of rail experts from South Korea and India. The team has already submitted a report to the ministry of railways.  Thus, the Indian Railways is pushing full steam ahead on this project of introducing high speed trains even though it will cater to a very small percentage of the travelling public.

The millions of travelling people desire better services, increased capacities, increased safety and conditions of travel fit for human beings. Clearly, these are not the concerns of the ruling class, whose interests the Railway Minister and his government defend.

Secret deals for privatisation

On August 7th , 2015, the Rail Minister held a closed door meeting  at the Bombay Stock exchange with foreign and domestic investors including multinational i-bankers, FII’s, domestic insurers like LIC and other financial institutions. The media or workers representatives were not allowed in this secretive meeting. The meeting was called by the Railway minister to understand from these money lending capitalists what were their demands and conditions for investing in the Indian Railways. Though the minister claims that he wants to introduce transparency, holding secretive meetings with money lending sharks exposes his claims as hollow. The Indian Railways belongs to the people of India and the Railway Minister has no business to have secret meetings with money lenders.

In January 2nd and 3rd, 2015, the Prime Minister of India, Modi,  the Finance  Minister, Jaitley as well as the top Government officials of the Finance Ministry were closeted for two days with foreign and domestic finance capitalists in Pune, for discussions on how to privatize the Indian Public Sector Banks.  Here again the media or workers representatives were not allowed.    The Indian Public Sector banks are holders of the savings of the Indian working people and the government of India has no business to hold secret meetings with private profiteers who want to get hold of these accumulated savings for their speculative purposes.

Public-private partnership model

Mr. Prabhu announced that 400 railway stations will be redeveloped through private participation. While the railways would nominally own the land, the station development and exploitation for business would be handed over to private companies.  According to the Railway Minister, 30-40% of the Railways’ revenue should come from such non core business, as against only 2% currently earned from such non core business. Currently the railways earns the bulk of its revenues by transporting goods and people, which is considered its core business. However, it is believed that with the real estate industry in a severe crisis, this scheme does not look likely to take off soon.

Selling railway property to private capitalists

The Railway Minister has asked SBI Cap, the investment banking arm of the State Bank of India, to draw up a plan to earn resources from the railways property. Also they have been asked to draw up a plan for creation of a holding company structure for the Indian Railways which will include the various subsidiary companies now functioning under the Railway Ministry such as IRCTC(Indian Railway Catering and Tourism Corp.), IRCON, RITES,  IRFC(Indian Railway Finance Corporation) and others. It is thought to sell the shares of these companies to the private parties as another means of raising money. This is another means of introducing privatization.

The Railway Minister is also actively thinking of how to encourage private trains to run on the existing railway tracks, reducing the Indian Railways’ own operations. He is reported to have said “Eventually we have to get more private sector in the operations of the railways. Today, we are not able to get them because there is so much of congestion. If we create this capacity and availability, then private sector can come in and this will also generate for us a lot of money eventually, without making any investment. We will own the network, they will operate the trains. We can make money out of it“. It is obvious that the private capitalists will operate the profitable sections of the railways, such as carrying goods and catering to the needs of the rich by providing bullet trains etc, while the Indian Railways will be left to run the loss making part, namely the carrying of millions of working people at subsidized rates and in inhuman conditions. This is the direction in which the Railway Minister and the government want to take the Railways. 

Fat salaries for the top officials

A few months back the Railway Minister wrote to the Chairman of the Seventh Pay Commission with a request to increase the salaries of the top railway officials, i.e. the Chairman of the Railway Board, Railway Board members(there are 6 members) and General Managers of the zonal railways (there are seventeen GM’s) . For example, he requested that the Chairman of the Railway Board be given a salary equivalent to that of Cabinet Secretary and Chief of Army Staff, the top posts in Administration and Armed forces respectively. He also requested for the salaries of the GMs to be elevated to the ranks of the Chief Secretaries of the states.

It may be noted that several of the posts of the top Railway officials are very lucrative posts, with hidden gains that run much beyond the official salaries. It may be recalled that in 2013, one of the railway board members was caught in a scandal offering Rs. 10 crore to the then Railway Minister for the post of Member- Electrical, a post that has much financial power for sanctioning projects!

Deteriorating working conditions of railway staff and disregard for passenger safety

The Railway Minister has no time to address the grievances of the lakhs of agitating loco pilots, guards, signal and telecommunication staff, engineers, linesmen,  etc.  who are finding their working conditions deteriorating from day to day due to under staffing  and increased  workloads.

On 14th of December 2015, thousands of loco pilots from all over India demonstrated in front of Rail Bhavan, the Railway Ministry’s headquarters in New Delhi. They were demanding implementation of the recommendations of three committees constituted by the Railways --  (a) High Power committee to look into the working hours of the running staff- drivers and guards (b) Safety Committee- headed by Dr. Kakodkar, ex-chairman of the Atomic Energy Commission and (c) SPAD(Signal Passing at Danger) Committee . These committees had recommended (i) not to increase the number of trains operating and also not to increase the speed of the trains since the tracks were already over strained to full capacity (ii) to restrict the sign on to sign off times of the running staff to less than 10 hours. (iii) to restrict the continuous night duty of drivers and guards to a maximum of two as well as a number of other measures connected to the working and security of the workers and travelling public. However the authorities have been increasing the number of trains as well as the speed of the trains The running staff, the drivers and guards are forced to work for more than 12 hours at a stretch, seriously endangering themselves as well as the public. Also due to overstretching of the work of drivers, the number of signal passing at danger (SPAD) cases were rapidly increasing, leading to suspension of the drivers.

For example in June of 2015, there was a major fire at Route Relay Interlocking (RRI) cabin of Itarsi Junction on the Central Railway. More than 300 trains pass through this junction every day and it is one of the busiest stations in India. This fire completely disrupted rail traffic for two months in the busy holiday season and inconvenienced millions of poor people who had booked their tickets. The reason for the fire was that a part of the RRI was due for replacement since 1998!

Railway workers oppose privatisation

It is neglect of such safety procedures that the railway workers are protesting against. However, the Railways continue to violate the recommendation of their own committees and the Railway Minister has not yet replied to the genuine demands of the railway men.

On February 23rd 2016, thousands of guards will be demonstrating in front of Rail Bhavan in New Delhi in support of the above demands as well as the unjust recommendations of the 7th Pay Commission, regarding their category.

The above facts clearly show that despite the declarations of the Central government and the Railway Minister to the contrary, they are fully pushing ahead on the road to privatization.

MEL fully supports the struggles of the  railway workers against privatisation of the Railways as well as in defence of their working conditions and the safety and well-being of the passengers.

 

Tag:    Defeat Privatisation    Privatisation    Indian Railways    budget    Mar 1-15 2016    Voice of the Party    Economy    

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