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Why should we demonise privatisation?

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 Nehruvian socialism is so ingrained in our brain that the word privatisation elicits choleric responses from large number of people in India. Something similar is happening right now. The decision by the current government to allow private players to run trains on select routes are being criticised. We can hear people quipping that for the BJP government ‘Vikas’ means privatisation. 

If people such as these had their way we would have probably never seen Indian sky being opened for private airlines. We would probably still be flying with Indian Airlines and Air India and complaining about pathetic services and non-adherence to time like we do today for Air India.  

It is amazing how we continue to demonise private industries and industrialists despite the fact that the Nehruvian socialism and nationalisation led us to the precarious economic situation in 1991. 

In this article I will try to answer why it is wrong to question government’s decision to allow private players to run trains and give examples of inefficiencies from other industries owned and operated by the government. The headline of Asian Times on Indian government’s decision to allow private players to run trains read like this “India’s decrepit 167-year-old train network is about to embark on a new era of transportation under a $4 billion plan to privatize most of its passenger routes.” And this is exactly the problem. Despite being the second largest rail network in the world and running for so long Indian Railways still reeks of past. Apart from Train-18 we don’t have anything significant to showcase which can associate Indian Railways with modern times. 

People who are criticising the move probably don’t understand how Indian railways is planning to proceed with this decision. When we go into the plan of the move we come to know that the private entity willing to run trains shall pay to Indian Railways:

> fixed haulage charges, 


> energy charges as per actual consumption and, 

>share in Gross Revenue determined through a transparent bidding process. 

Moreover, the operation of the trains by the private entity shall conform to the key performance indicators like punctuality, reliability, upkeep of trains etc. The aim of the Indian Railways and in extension of the current government is clear; to introduce modern technology, provide enhanced safety, and cater world class travel experience to passengers. 


We keep hearing about worsening operational cost of Indian Railways but India’s first private train Tejas posted a profit of 70 lakh in the first month itself. Allowing these private players to run trains will help the Indian Railways transform its image. And people who worry about the train fare going through the roof is unfounded. First, in market driven economy prices are fixed basis supply and demand and chances of fare going out of hand is minimal. Second, India is still a welfare state. Fare will be regulated by the government in public interest. Take for example when Airlines were given permission to re-start the operation post lockdown, government fixed the fares for different routes. So assuming private players will make the train travel very costly is grossly misplaced. 

I believe government has no business to be in the business. It should focus on governance and enable people and entity to do business. Monopoly of an industry by the government comes with its own pitfalls. 

Take for example defense industry. The project of Tejas fighter jet started in 80’s and we still don’t have a modern fighter jet of our own. The current crop of Tejas fighter jets are decades behind in technology. India still doesn’t have its own Jet engine, again the project for which started in 70’s. There is crying need to allow private players in the defense industry if at all India wants to be ‘aatma nirbhar’ in defense technology.

I still remember when BSNL was the only service provider for mobile phones, it was either very difficult to get the sim or you buy the sim through an agent costing as high as Rs 800. It was Reliance CDMA that put the phones in people’s hand, and cost came down further when other private players entered Indian market. Now India boasts of lowest cost per gb data. We are replete with several examples where private players made things better and cheaper. We Indians need to get out of this mentality of demonising privatisation and see the bright side it brings. 

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