The government will allow private companies to set passenger fares once they start operating rail services in the country, a move aimed at attracting investors, as the administration headed by Prime Minister Narendra Modi opens the network railway.
“Private actors have the freedom to set tariffs in their own way,” said VK Yadav, Chairman of the Railway Board. But “air-conditioned buses and planes also operate on these routes, and they should keep this in mind before setting fares.”
Rail fares are politically sensitive in India, where trains carry as many passengers every day as the Australian population, and part of the country’s poor depend on the sprawling network for their transport. As the network has been beset by decades of neglect and inefficient bureaucracy, PM Modi’s administration has invited private companies to participate in everything from modernizing stations to operating trains.
Moreover, the decision to partially open the rail sector comes as PM Modi finds himself with limited fiscal space to support Asia’s third-largest economy, which is struggling with its first contraction in more than four decades.
Alstom SA, Bombardier Inc, GMR Infrastructure Ltd and Adani Enterprises Ltd are among the companies that have expressed interest in these projects, Yadav said. These projects can generate investments of more than 7.5 billion dollars over the next five years, according to estimates by the Ministry of Railways.
Modernizing the railways is crucial for Prime Minister Modi, who is betting on low-cost loans from Japan to build the country’s first high-speed train by 2023. The government has taken steps to increase the speed of railways. passenger trains that can sometimes crawl slowly.
The government asked companies to indicate their interest in running passenger trains on 109 origin-destination routes via 151 trains in July, and sought investor interest in upgrading railway stations, especially in New Delhi and in Mumbai. The current rail network is both congested and aging, dating back to British colonial rule in 1853.
