PPP and Indian Railways

 

PPP & Indian Railways

1. Introduction

Indian Railways (IR) is one of the world’s largest railway networks, carrying over 8 billion passengers and 1.5 billion tonnes of freight annually. Traditionally, IR has been government-owned and operated, with the Ministry of Railways handling both policy/regulation and operations.

However, since the early 1990s, there has been a gradual shift towards Public-Private Partnerships (PPP) and selective privatization, aligning with the principle that government focuses on core policy-making and regulation, while private sector handles non-core or commercial activities.

2. The Journey So Far (Past Initiatives)

2.1 Early Privatization & PPP Experiments

- Container Corporation (CONCOR, 1989): Semi-corporatization of container freight.
- Private Freight Terminals (2007 onwards): Encouraging private firms to build and operate terminals.
- Railway Wagon Leasing Policy (2008): Allowed private players to invest in wagons.

2.2 Station Redevelopment Projects

First phase involved New Delhi, Habibganj (Rani Kamalapati), Gandhinagar stations with private participation. Model: DBFOT (Design-Build-Finance-Operate-Transfer) – private partners invest in modern stations and recover through rentals & commercial use.

2.3 PPP in Freight Corridors

Dedicated Freight Corridors (DFC): Though executed primarily by a government SPV (DFCCIL), private sector was engaged in civil contracts, signaling, electrification, and PPP in rolling stock supply.

2.4 Non-Core Areas Opened to Private Sector

- Catering services (IRCTC-licensed vendors, private contracts).
- Parcel services & logistics chains.
- Advertising rights on trains/stations.
- Private train operators: (e.g., Tejas Express operated by IRCTC under a quasi-PPP model).

3. Present Scenario (Current PPP/Privatization Model)

3.1 Core vs Non-Core

- Core activities (Government focus): Track ownership, safety regulation, signalling, electrification, policymaking, staff management.
- Non-core/commercial activities (Private focus): Station redevelopment, passenger amenities, catering, freight terminals, logistics, private trains, IT solutions.

3.2 Major Ongoing PPP Projects

- Station Redevelopment: Habibganj, Gandhinagar, Ayodhya, Secunderabad, Vijayawada – through DBFOT model.
- Private Freight Terminals: More than 100 terminals operational under PPP.
- Rolling Stock & Leasing: Wagon leasing companies and loco leasing firms expanding.
- Tourism Trains: Bharat Gaurav trains operated by private players under IR supervision.
- Private Trains Initiative (2019–2021): IR invited private investment in 109 routes. Partial success, with IRCTC’s Tejas Express as a pilot.

3.3 Financing & Risk-Sharing

IR retains sovereign control & safety oversight. Private sector invests in infrastructure & services, earns via user fees, rentals, and commercial exploitation. Risk-sharing frameworks still evolving (many projects see low investor response due to tariff/regulatory constraints).

4. Future Prospects (Vision Ahead)

4.1 Government Role

Continue as policy-maker, regulator, and infrastructure owner. Establish an independent Railway Regulator (on lines of TRAI for telecom) to balance government-private roles in tariffs, safety, and dispute resolution.

4.2 Private Sector Role

- Station Redevelopment: 500+ stations targeted under Amrit Bharat Station Scheme; majority through PPP.
- Freight Expansion: Dedicated Freight Corridors to be extended; private logistics parks and multimodal hubs will expand.
- Passenger Services: More semi-high speed and luxury trains via PPP (e.g., Vande Bharat operations, Bharat Gaurav).
- Technology & Innovation: AI-based ticketing, digital freight booking, smart stations – led by private tech firms.

4.3 Challenges Ahead

- Balancing social service obligations (subsidized passenger fares) with private profit motives.
- Ensuring uniform safety standards across government and private operations.
- Building investor confidence through transparent regulation and predictable returns.
- Labour unions’ resistance to privatization of passenger operations.

5. Comparative Perspective

- Airports in India (GMR, GVK, Adani models): Successful PPPs serve as templates.
- Highways (NHAI PPP models): IR may replicate Hybrid Annuity/DBFOT for large projects.
- Metro Rail: Nearly all new metro systems (Delhi, Hyderabad, Mumbai) are PPP or semi-PPP, showing the way for urban/suburban rail PPPs.

6. Conclusion

Indian Railways is at a transition point:
- So far: Gradual introduction of PPPs in catering, freight, station redevelopment, private trains.
- At present: Mixed success – strong in freight/logistics & station redevelopment, weak in private train operations.
- Future: PPPs will dominate non-core activities (stations, catering, terminals, IT). Government will retain policy, safety, and track ownership. Gradual privatization will create a hybrid model: IR as an infrastructure regulator + private sector as service provider.

If managed well, this model can ensure efficiency, investment inflows, and better passenger experience, while maintaining the social and national integration role of Indian Railways.

7. Key Points (Executive Summary)

- Indian Railways shifting from fully government-owned to PPP-based hybrid model.
- Past: Privatization attempts in freight, catering, and limited private trains.
- Present: Station redevelopment, freight terminals, wagon leasing, tourism trains.
- Future: PPP to dominate non-core areas, with Govt focusing on policy & safety.
- Challenges: Balancing social obligations, safety, investor confidence, union resistance.
- Lessons from airports, highways, and metro rail PPPs can guide Indian Railways.

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BPO - Business Process Outsourcing & Privatisation in Indian Railways

 

Business Process Outsourcing

A MCQ has been asked in AFA LDCE 2024 Exam - BPO stands for _________ 

What is BPO ?

• Business Process Outsourcing (BPO) is the practice of contracting specific business tasks or processes to a third-party service provider.

• These tasks typically include non-core activities such as customer service, IT support, data entry, accounting, and payroll management.

• BPO helps organisations reduce costs, improve efficiency, and focus on core business activities by outsourcing repetitive or specialised tasks to external experts.

• BPO can be domestic (within the same country) or offshore (to another country).

 

Types:  

1. Back-Office Outsourcing: Administrative tasks such as Accounting, HR, Customer support, and IT services. 

2. Front-Office Outsourcing: Customer-facing functions like Sales, Marketing, and Technical support. 

3. KPO - Knowledge Process Outsourcing: High-value knowledge intensive tasks such as Research, analytics, and engineering. 

Advantages: 

1. Cost reduction: Operational costs will be reduced by leveraging lower labour costs in other countries.

2. Scalability: BPO providers can quickly scale up or down their services to meet fluctuating business needs according to the demand.

3. Expertise: Allows firms to access specialised expertise and resources that they may not have in-house. 

4. Focus: Focus on Core competencies by outsourcing non-core functions such as accounting, Sales, Marketing, HR etc.

Challenges: 

1. Communication barriers: Cultural differences and language barriers can sometimes hinder effective communication between the client and the BPO provider. 

2. Data Security concerns: Concerns of sensitive data at BPOs. 

3. Vendor Management: Managing multiple BPOs for various operations can be complex and time-consuming. 

Conclusion: BPO has been best suitable for industries like IT, Finance, Healthcare, and Telecommunications. By effectively outsourcing non-core functions, firms can improve their efficiency, reduce costs, and focus on their core business activities. 

List of prominent BPOs in India, serving a variety of sectors globally: 

1. TCS: Tata Consultancy Services (TCS)

2. Infosys BPM (Business Process Management)

3. Wipro BPS (Business Process Services)

4. Genpact (a GE Business unit)

5. HCL Technologies BPO Services

6. Tech Mahindra Business Services

7. Cognizant Technology Solutions

Indian Railways and BPO:

• Indian Railways has been exploring various avenues to outsource its non-core activities to the BPOs. Some of the Non-core activities are: 

1. Ticketing and reservations

2. Call centres and customer support

3. Back-office operations (e.g., HR, payroll processing)

4. IT and administrative task

Is it Privatization or Outsourcing in Indian Railways ?

The Railways has around 13 lakh permanent employees and over 4.5 lakh contractual and outsourced staff. It shows a ratio of 3:1.  May be in coming days, this ratio may be jump to 2:1

Activities (termed as Non Core) that are already outsourced on a phased manner in Indian Railways are :

1. AC Coach attendants

2. Platform cleaning

3. Security

4. Executing the works in Indian Railways

5. P.Way maintenance

6. Catering & Pantry car

7. Hospitality

8. Doctors in Railway Hospital

9. Supply of Bed linen in AC Coaches

10. OBHS – On Board Housekeeping Services

11. Parcel vans

12. Sanitation in Railway colonies

13. Managing Retiring Rooms Dormitories

14. Housekeeping of Railway Stations

15. Railtel for telecom operations

16. RVNL for construction activities

17. Disburse salaries through NEFT (thereby reducing the Cash office staff)

18. Doorstep Banking

19. Engineering Surveys

20. Painting or removal of paint of Rolling Stock in Production Units / Workshops

21. Maintenance of IVRS – Interactive Voice Response System

22. Transportation of released track material

23. Leasing of SLR space

24. Unscheduled and scheduled repairs of house wiring and operations of  Pumps/DG sets / Stationery AC Plants/ Distribution network of power supply

25. Unscheduled repair of major electrical assembly of locomotives / multiple units / Alternator / fans / Compressor in AC Coaches

26. Waiting halls in Platforms

Proposed / Contemplated activities are

1. PMC – Project Management Consultancy – Supervising the Works

2. Corporatisation of Railway Production Units and Workshops

3. Corporatisation of all construction activities

4. Railway Station operations (as a whole)

5. EPC – Engineering , Procurement and Construction (from estimate stage to completion stage)

6. Certain activities of Salary preparation, maintenance of Provident Fund / NPS etc

·         Private Trains

The above list is endless. I advise Railway employees to face any eventuality of the rapid changes in the Indian Railways in coming days.

Note:

The author neither supports nor opposes the privatisation of non-core activities in Indian Railways.

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Bharat Gaurav Tourist Trains - Desh Apna Dekho

 

Bharat Gaurav Tourist Trains

• An initiative under “Dekho Apna Desh” to promote domestic tourism

• Policy from 01.04.2022

• Theme-based tourist circuit Trains

• To showcase India’s rich cultural heritage and magnificent historical places to the People of India and the World.  

• At present, IRCTC is already running several tourist circuit trains on Railways.

• Now, Railways Invited professional private tour operators to run the above trains 

• Themes like Ramayana - covering places connected with Lord Shri Ram, Guru Kripa - Cover important places of Sikh culture, etc.  

•  The first phase - Allocated 180 Trains with 3033 coaches like Vande Bharat, Vista Dome, and LHB Coaches. 

Salient features: 

• Private Tourist service provider - free to decide the theme

• Offer all-inclusive package including travel, accommodation, sightseeing arrangement, tour guides, etc. 

• Full flexibility to decide package cost based on the services provided by them. 

• Choice of Coaches like AC and Non AC and Accommodation like  Luxury, Budget, etc. 

• Free to design/furnish interior and exterior of Coaches. 

• Branding and advertisement are permitted both inside and outside of the Train. 

• Train composition - 14 to 20 Coaches 

Process of selecting Tour operators:

• Online registration 

• Registration fees - Rs. One Lakh. 

• Security Deposit - Rs 1 (one) Crore per rake.

• Individual, Partnership Firm, Company, Society, trust, JV/Consortium (Unincorporated/Incorporated) are eligible.

• Right to Use charges and Haulage charges are notified in the policy for Service Provider to work out his business model.

• Right to Use Period: 2-10 years.

First / Maiden Bharat Gaurav Train 

• Between Coimbatore to Sai Nagar Shirdi round trip with tourist places of Mantralayam  on 14.06.2022

• 5 days trip

• Southern Railway gets an annual fixed revenue of Rs. 3.34 Crores.

• Registered Service provider - South Star Rail, Coimbatore-based part of the conglomerate group - Future Gaming & Hotel Services Pvt Ltd. 

• Security Deposit - Rs. 1 Crore per 20 coaches rake, Annual right to use charges - Rs. 27.79 Lakhs and Quarterly Fixed haulage charges - Rs. 76.77 lakhs  

• Variable haulage charge of Rs.38.22 Lakhs (excl: GST) for 5 days trip 

• 1100 tourists traveled

• Composition : First AC Coach -1, 2-tier AC coaches – 3, 3-tier AC coaches-8, Sleeper Class coaches-5 , Pantry car-1 and Luggage-cum-brake Vans-2. (Total – 20 coaches)

•  All coaches - refurbished the interiors

• Public Address system - provided for all coaches - for regular communication, playing devotional songs and mantras 

• Doctor on board to attend any emergency

• Private security in Train

• On board AC Mechanic and electrician 

• Maintained by branded housekeeping service providers 

• Catering facility - traditional vegetarian menus

• Radio jockey to entertain the passengers during the journey.  

Shri Ramayana Yatra

•  18 days trip - started from New Delhi on 21st June 2022 

• Operated by IRCTC as Bharat Gaurav Tourist Train

• Cover approximately 8,000 KMs

• IRCTC is the first Indian agency to connect India and Nepal through a tourist train. 

•  Covers Janakpur (Nepal), Ayodhya, Janakpur, Buxar, Kashi, Sitamarhi, Chitrakoot, Prayagraj, Hampi, Nasik, Kanchipuram, Rameshwaram, and Bhadrachalam. 

• The capacity of 600 tourists. 

• AC 3 Tier Coaches

• Single occupance - Rs. 71,820, Double occupancy - Rs. 62,370, Child with bed (5-11 years group) - Rs. 56,700 (Ticket is uniform irrespective of boarding point) 

• All-inclusive package of Travel, Food, Accommodation, Guide, etc

• Boarding points: Aligarh, Kanpur, Tundla & Lucknow 

 Key Takeaways for MCQ

1. Branded as Bharat Gaurav Tourist Train

2. Initiative under “Dekho Apna Desh”

3. Policy w.e.f:  01.04.2022

4. First / Maiden Bharat Gaurav Train - Coimbatore to Sai Nagar Shirdi

5. First Registered Service provider under Bharat Gaurav Scheme - South India Star, Coimbatore-based firm

6. Right to use period - 2 to 10 years

7. Online Registration fees - Rs.1 Lakh

8. Security Deposit for each Rake - Rs. 1 Crore

9. Bharat Gaurav Tourist Train between India and Nepal  - Operated by IRCTC

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