Railway Privatization Spree Shows Indian State is fully Subservient to Monopoly Class Interest


The people in our country are passing through an agonizing time in the wake of the Covid-19 pandemic. Loss of earnings, job loss, health problems, lock down trauma of migrant labour and a host of ordeals are haunting them. In the midst of this, the central government is taking several policy measures in the service sectors, industry, education, agriculture etc. Devaluation, downsizing and disintegration of public sector being aggressively pursued by the government through the policy of privatization and outsourcing of various activities resulting in a virtual ban on recruitment and unabated abolition of posts. All these anti-people measures are carried out without any transparency and overruling any discussion in the parliament. One of such major measures being all out privatization of Indian Railways, the largest public sector undertaking and the biggest employer in the country with a total employee strength of nearly 14 lakhs. It is also the eighth biggest employer of the world. This is also a part of the larger agenda of selling out several other public sector undertakings, the national assets, to private players within the country and abroad. The list includes the Maharatna and Navaratna undertakings like BPCL, BSNL, etc.

Agenda of privatization of Railways

On July 1, 2020, the Railway Ministry announced that 151 trains in 109 pairs of routes will be operated by private sector and that the private sector will invest Rs 30,000 crores. The private companies will be allowed to procure train and locomotives from any source of its choice in a nomenclature of “THEJUS”. The fares will be fixed by the investor, the government or railways will have no role in it. Following this, on July 2 the Railway Board issued a letter to its zones to slash 50 per cent of vacancies and freeze creation of new posts. Since 2018, the Railways has 72,274 vacancies in safety category and 68,366 in non-safety category, taking the total number of vacancies notified to 1,40,640 as reported in the press. Instead of filling up the posts necessary for the safety and efficient running of the trains, the government is planning to downsize the staff strength. These measures are part of Modi govt’s plan of privatizing the Indian railways,

The dismantling of the whole railway structure is proceeding in tune with the recommendations of Bibek Debroy panel, a blue print for all out Privatization of Indian Railways in favour of the Corporates. It affects the entire economic system which in turn adversely affects the common people and railway employees as well. The situation is alarming. The concession on railway fares to different categories of people will be severely curtailed for the maximization of profit for the capitalists. By these measures the public welfare outlook of government institutions will be reduced to a minimum. The IRCTC came into existence during the regime of Vajpayee Government in 1999. It delinked booking of tickets, maintenance of pantry car, parcel van, stations, platforms etc. The Congress government followed suit and the present Modi Government aggressively continues to privatize various functions of the Indian railways,

Railways under British Regime

The Indian Railways (IR) with a history of more than 160 years is one of the largest and busiest rail networks in the world. IR transports on the average 3 crores of passengers and 30 lakh tons of freight daily across the length and breadth of the country. The Indian Railways began its journey in the 1850s under the British rule. The East India Company and the British Government were interested in developing railways mainly for two reasons, one to transport raw materials, particularly cotton from the countryside to the harbours and the other for troop movement. Initially, the British government encouraged private investors under a scheme that would guarantee an annual return of five percent during the initial years of operation. Thus the railway was totally operating to fulfil the interest of British capitalists to boost their trade and productivity. But later the Prince of Britain made a decision to make it a state affair to suit the imperialist aspirations.  More attention was paid to passenger’s amenities and more comfortable seating accommodation in railway compartments was provided. In the 1920s Railway was nationalized with the state management and new jobs for the Indians were created. The railways also played a significant role in the freedom movement by helping the people across the length and breadth of the country to unite as one nation. That virtually helped in the growth of public mobility and the development of the Indian freedom struggle side by side.

Post-independence scenario

In post independent India, taking inspiration from the erstwhile USSR, the five year plans put much emphasis on development of railways which accelerated the process to build up the huge assets and the massive national network the railways possess today using public exchequer alone. The railways had become the main means of transport for the common man. The government of India also initiated the complete nationalization of the railways. In 1951, a total of forty-two separate railway systems, including thirty-two lines owned by the former Indian princely states, were amalgamated as a single unit which was christened as the Indian Railways. The Railway Board regrouped the Indian Railways into six zonal systems, namely, the Northern, the North Eastern, the Southern, the Central, the Eastern and the Western Railways.

Through the ambitious five year plans, the Indian Railways started its onward journey in independent India. The first five year plan of the Indian Railways was started in April 1951.The thrust given in the plan was mainly on rehabilitation of assets and indigenous development of railway equipment through the establishment of various production units by railways themselves. The other objective of this plan was to provide better amenities to the travelling public and better housing and welfare for the staff. At the end of this plan about 40,000 quarters were built for the Railway employees; 500 locomotives, 4350 coaches, 41,200 wagons were manufactured; 380 miles of new lines were laid. Through subsequent five year plans, spanning more than 6 decades, with people’s money and labour, the Indian Railways has built a vast network, the fourth largest railway network in the world by size with a route length of 68,155 km as of March 2019. In the fiscal year ending March 2019, Indian Railways carried 844  crore  passengers and transported 123 crore tons of freight. Indian Railways runs 13,523 passenger trains daily, on both long-distance and suburban routes, covering 7,321 stations across India. In the freight segment, Indian Railways runs more than 9,146 trains daily. As of March 2019, Indian Railways’ rolling stock  consisted of 289,185 freight wagons, 74,003 passenger coaches and 12,147  locomotives.

The Indian Railways has huge assets. As on 2019, the Railways possess 4.78 lakh hectares of land (Ref.1). A considerable portion of this is prime lands located in cities and towns and the cost is huge. There are around 6.5 lakh staff quarters as on 2005. (Ref.2). The Indian Railways have grown to a separate autonomous entity and the practice of a separate railway budget had begun in 1925. This practice continued after independence as well. The railway budget used to be presented a few days before the general budget. It was in 2017 that the BJP government put an end to this age old practice and merged the rail budget with the general budget. The railways have been running always on profit as seen from the operating ratio per cent given in IRS Annual Report 2018-19 (Ref 3). Perhaps to hide this fact from public view this merger of rail and general budgets was made so as to justify the plan of privatization. It may be also noted that the operating ratio was highest 98.44% (what it means is spending 98.44 paise to earn 1 rupee) in 2017-18 after the merger of railway and general budgets.  It is this huge assets built with people’s money and labour that the Narendra Modi-led BJP government is targeting.

Deceitful Arguments in favour of privatization

Prime Minister Narendra Modi has conveniently forgotten his previous commitment of non-Privatization of Indian Railways as he said during inauguration of expansion of Diesel Locomotive Works (DLW) in Varanasi, Uttar Pradesh on 25th December 2014. The same commitment was made by the Union BJP railway minister against privatization in the Parliament on 12-07-2019, 22-11-2019 and 16-03-2020 respectively. In gross violation of these commitments, the Government of India has announced these anti-people reforms in the Railways in the Press Information Bureau (PIB) on 08-07-20.

Coming back to the July 2020 order for the introduction of private trains, the Railway board said that the objective is “to introduce modern technology rolling stock with reduced maintenance, reduced transit time, boost job creation, provide enhanced safety, provide world class travel experience to passengers, and also reduce demand supply deficit in the passenger transportation sector.” The usual trick that the bourgeois governments follow to privatize a public enterprise is to make it inefficient and eventually bankrupt by policy decisions and by encouraging corrupt practices. Then branding it as loss making, hand it over to the private players. It is like the old saying “Give the dog a bad name and kill it”. But in the case of the railways such arguments may not hold water since it is still robust and making profits. It is still the affordable means of transportation of crores of common masses. So the justifications quoted above such as “to introduce modern technology rolling stock with reduced maintenance ….” are untenable. Is it not possible for the Indian Railways that has run the enterprise for more than a century to do the modernization that is required? Is it required to invite some small time businessmen with little experience in running of railways to introduce modernization?

Will the proposed step be able to achieve the objectives mentioned?  As per the memorandum, the 151 trains in 109 routes will be driven by Indian Railway drivers and crew. The track maintenance, signalling, security, stations and all other infrastructure will be the responsibility of Indian Railways. The private investor only has to procure the coaches and maintain them. The gross revenues will be shared with the railways as per the bidding agreement. What sort of modernization is this? The only result expected is that train travel will cost more and may approach air fare. Already the railways has introduced schemes like premium Tatkal, Suvidha etc. to fleece the people. Now it will be extended to whole trains and in a bigger way.

There are also serious safety concerns, since the coaches are under the control of the private operator and other infrastructure like track maintenance, signalling system etc. are under the railways. Who will be held responsible in case of an accident?  How does this arrangement enhance safety as said in the memorandum? When the government is ready to spend 1 lakh crore for the so called bullet train, where is the shortage of funds for modernization and improvement of safety? Again what is the need for this type of nonsense projects like the bullet train? The Indian Railways is forced to make these types of useless investments to cripple the railways and make it economically unviable. The aim is clear – it is only to hand over the railways piece by piece to the corporate houses close to the ruling establishment to make quick profits.

Coming to the employment question, on 3 July 2020, the railway board issued a letter to its zones to slash 50 per cent of vacancies and freeze creation of new posts in a bid to cut costs, the Director General (HR), Railway Board, Anand S Khati told reporters  that the Railways will be “rightsizing and not downsizing”.  Not much explanation is required on this; anyone with some common sense can understand the meaning of what the Director General said. The message is clear that as in the case of other public sector enterprises in the country, the government has put its axe on the biggest employer of the country, the Indian Railways which was owned by the public.

Further the government has tried to back its decision by introducing a totally ludicrous logic. They say that prices will be competitive and quality will improve through competition. We have seen the hollowness of this logic in the case of the telecom industry. There too, in the name of increasing competition, various discounts were given to private companies and the government company BSNL was completely destroyed. If privatization was the panacea, how is that industries after industries in private sector are closing down? How dearly the common people of India are paying price of large scale privatization of healthcare in transmission of Covid 19? 

Why the move for privatization in this hour?

Railways have become an integral part of India even before the independence. After independence, there emerged a need for setting up of this sector to meet needs of common people and also to address the need for increased transportation for rapid industrialization. The Indian capitalists wanted a strong network of railways in the country. For them, there was the necessity for augmenting railway services and setting up tracks and routes so that raw materials and finished goods could reach their destinations at low costs. Roadways and airways were expensive and waterways were not available everywhere. A good network of railways would lower the cost of production for capitalists, assisting in increase of profit and wealth. But at that time, the capitalists of India did not show any interest in the direction of capital investment in railways, because investment to build the infrastructure of the railway sector was huge and there was no immediate and direct profit, other than lowering of transportation costs. For this reason, the then Government of India took upon itself the responsibility of raising the railway sector in the interest of the capitalist class. That is, the hard-earned money of the common man collected by the government in the form of taxes were utilized for the construction and production of infrastructure and equipment required for laying out a large network of railway tracks, for setting up locomotive workshops, coach factories and other things.

However, in the last few decades, globalization has been the reigning policy due to stupendous wealth concentrated in the hands of the Indian capitalist class and their aspirations to go global. Having exploited the working class for years together, they had become very powerful. The capitalist class now had the required strength and intent to draw profits from public sector projects. This was also largely assisted by the readymade infrastructure available at the expense of public money. Hence, there was increasing pressure on the government to disinvest public sector units – banks, telecom, oil and natural gas, power industry, and others. This paved the road to privatization and led to increasing disinvestment in the railway sector as well. There is no telling about the super profits that a readymade railway network can provide for them, backed by so many forms of guarantees provided by the government. Notwithstanding, the government had acted in the interests of the capitalist class when it had taken up the responsibility of setting up the railways, and it has done the same while handing it over to them now when it has become convenient to do so. This is what can be expected from them, given that we exist in a capitalist system and the governments are nothing but subservient to the interest of the ruling capitalist class.

Treacherous plot must be resisted

Since the initiation of the privatization, liberalization and globalization agenda two decades back, the attack on the public funded institutions in the social welfare sectors such as health care, education, transport etc. had begun. In the recent past it has become all the more aggressive. Faced with severe market crisis in the manufacturing sector, the profit hungry capitalists-imperialists are targeting the service sectors in a big way. It is part of this agenda that the Indian railways, the largest public sector undertaking in the country, built up over a century with people’s labour and money is targeted. The present government, claiming to be the champion of nationalism no qualms in selling out the national assets one by one to the local and foreign multinationals. The people of India along with the rail workers should rise up united to resist this heinous attempt before it is too late.


  1. Ministry of Railways, Assets of Indian Railways, 27 NOV 2019, PIB (Press Information Bureau), Delhi.
  2. http://www.indian railways.gov.in /railwayboard/uploads/directorate/land_amen/staff.jsp
  3. IRS Summary sheet Annual Report_2018-19

 General References:

  1. Historical Development of Indian Railways, Chapter III (From internet, the author and source could not be located)
  2. The complete story of Indian Railways, April 16, 2013, DNA article

 News Reports:

  1. “Private firms to soon run passenger trains as Indian Railways moves fast on privatization”, Milan Sharma, India Today , 2 July, 2020
  2. The Hindu editorial page article “Big reform on the wrong track”, T Stanley Babu, L P S Anand and V Carmelus, 21 July, 2020
  3. Indian Express, 3 July, 2020, “Railways asserts no job losses on cards: Will be rightsizing, not downsizing”
  4. The Hindu, “The Hindu Explains | Why has Indian Railways opened doors for private players?”, G Ananthakrishnan, 5 July, 2020
  5. Indian Railways Made its Least Ever Profits in the Last Financial Year. Here’s What it Means—News 18 Business, April 20 2018]
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