Govt to Consider New PPP Policy for Railways, Will It Boost Private Sector Participation?

The Union cabinet is likely to consider a new public-private partnership (PPP) policy for railways with an aim to bring down revenue risk. Under the new policy formulated by the Indian railways, around 50 areas of collaboration have been identified, up from existing 17 areas, the Economic Times reported, citing official sources. 

To boost private sector participation in railway projects, the policy will also focus on reducing litigation and promoting arbitration routes to resolve disputes. Apart from this, the Indian railways under the new policy have identified certain key projects, including commercial lines like mineral corridors and port connectivity. 

It will also allow investors in railway tracks and associated infrastructure PPP projects to recover a usage fee via tariffs on freight movement.

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If the parliament clears the new PPP policy, it will replace the existing participative framework that has been in place since 2012. The policy laid down five PPP models, including non-government railway, joint venture, customer funded, build operate transfer and BOT-annuity models. 

Standing Committee on Railways Concerns & Suggestions 

This development comes just a month after a standing committee on railways submitted its report suggesting the government to encourage PPP to boost the manufacturing capacity of train coaches, wagons and containers. It also recommended the railway ministry to assess the success of the PPP model mainly at Rani Kamalapati Railway Station to identify strategies that are working out so that the same can be extended to other railway stations. 

“...the committee desired the ministry to encourage PPP to bring in advanced coach-building technologies,” the report mentioned.

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The report highlighted that the net earnings of railways in the last three years have remained marginal for the past three years with lower passenger revenue compared to freight revenue. The committee suggested the ministry to increase the export of rail components to expand business operations. It also noted that out of 1337 identified stations under the Amrit Bharat Station Scheme, tender and development work is in progress at 1202 stations. To address delay-related issues with the project, it recommended a task force to be formed by the government.