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Nandan H. Dawda and Chitresh Shrivastva, “Private Participation in Indian Railways: A Policy Perspective on Challenges and Opportunities,” ORF Issue Brief No. 833, Observer Research Foundation, September 2025.
Indian Railways (IR) ranks as the fourth largest railway network in the world and the ninth largest utility employer globally, with a workforce exceeding 1.25 million.[1] Operating over 22,000 trains across a network spanning 123,235 kilometres, Indian Railways includes 95,979 kilometres of running track and serves more than 7,000 stations. Of the total train operations, approximately 13,000 are designated for passenger services and 9,000 for freight movement, collectively transporting an estimated 23 million passengers daily. In 2022, IR recorded 3.54 billion passenger journeys and transported 1,109.38 million metric tonnes of freight, reflecting a year-on-year growth of 8 percent.[2],[3] Figure 1 shows the Indian Railway network.
Figure 1: Indian Railways Map
Source: Ministry of Railways, 2024[4]
India also stands among the top three global exporters in the railway sector, as of 2022, having achieved a compound annual growth rate (CAGR) of 31.51 percent between 2010 and 2018. Railway exports were valued at US$633.27 million in 2021. Between April 2000 and March 2023, the sector attracted foreign direct investment (FDI) worth US$1.23 billion.[5]Despite this extensive infrastructure and growing demand, Indian Railways has faced persistent challenges, many of which are rooted in its state-dominated structure and operational inefficiencies. These include:
Chronic Financial Deficits: Heavily regulated passenger fares and cross-subsidisation between freight and passenger services have led to sustained fiscal deficits.[6] While passenger services account for 67 percent of the total passenger-kilometre traffic, they generate only one-third of total earnings. In FY 2013‒14 alone, losses on passenger and coaching services amounted to INR 31,727 crore, despite an INR 36,532 crore growth in passenger revenue. By FY 2014‒15, these losses had worsened, prompting the government to establish the Debroy Committee to explore structural reforms.
Deficiencies in Physical Infrastructure: According to the Ministry of Railways estimates, India will require infrastructure investment worth US$4.5 trillion by 2040. As of 2024, the railways would require an annual capital expenditure of US$27.18 billion, in line with the infrastructure planned for the railway network.[7] To further strengthen the infrastructure, the National Rail Plan 2030 projected a capital expenditure of US$7.9 billion per annum over the next five years as gross budgetary support.[8]
Limited Private Sector Participation: In most developing countries, railways remain under state control, and India is no exception. While private sector participation was introduced experimentally in 2006 and expanded to private train operations in 2015, these initiatives have largely underperformed due to persistent regulatory interventions and policy unpredictability. Since its implementation in 2019, the railways have operated three private trains on the following routes, with the first private train operated by the Indian Railways Catering and Tourism Corporation (IRCTC) between Lucknow and New Delhi, followed by the Mahakal Express connecting Indore and Varanasi, and the third private train connecting Mumbai and Ahmedabad.[9] The private players have also participated in the station redevelopment, with the Rani Kamlapati Railway Station (formerly Habibganj Railway Station) constructed and operated by a private entity, the Bansal Group (M/S Bansal Pathways Habibganj Private Limited).[10]
In contrast, the aviation and road sectors in India have attracted more robust private participation through user charges and toll recovery mechanisms. Indian Railways is financed through three sources: internal resources, budgetary support from the Central government, and extra-budgetary resources, which include institutional financing, public‒private partnerships, and foreign direct investment. However, despite these multiple financing channels, the system continues to incur annual losses. The operating ratio—an indicator of operational efficiency—hovered above 91 percent during the mid-2010s, highlighting the limited scope for reinvestment in capital improvements. Traffic volume increased significantly, accounting for 67 percent of the total passenger-km traffic, although passenger traffic contributed one-third of total earnings.
The losses incurred by Indian Railways in the financial year 2013‒14 led to the formation of the Debroy Committee on 22 September 2014 to recommend railway restructuring measures. The Debroy Committee Report on Restructuring of Railway Ministry and Railway Board (2015) highlighted the endowment of multiple policymaking, regulatory, and operations functions.[11] To boost the efficiency of private train operations, the Committee had recommended separating train operations from non-core activities, such as running schools and educational institutions currently managed by the railways, and transferring these to private entities. The Debroy Committee Panel noted: "There is an inherent contradiction between (i) trying to generate financial returns on rail investment high enough to attract footloose private finance and (ii) ensuring railways play their role, efficiently, as the veins of the material economy.”
The introduction of private trains in India presents a shift in the country’s railway governance, requiring a robust framework of social, commercial, and physical measures, which would help ensure inclusive, efficient, and sustainable outcomes. Social measures help safeguard the interests of passengers and railway employees, which include the vulnerable groups who may be impacted by changes in fare structures, service priorities or employment norms. Commercial measures play an important role in creating a level playing field for private operators while ensuring financial viability, customer satisfaction, and adherence to performance benchmarks. Physical measures include infrastructure upgradation, station modernisation, and rolling stock standardisation, which are crucial for supporting seamless operations, and maintaining safety and interoperability within the Indian Railway network. These measures help ensure that private train operations not only generate economic value but also align with broader public service objectives.
After the introduction of privatisation of IR in the financial year 2018‒19, there was a marginal increase in passenger earnings to INR 51,066 crores, which accounted for 5.51 percent of the earnings from suburban railways, while the remaining 94.49 percent was generated from long-distance services; 50.69 percent of the earnings came from second/sleeper class mail/express passengers. Within long-distance traffic, the second class (including the sleeper class) constitutes 67 percent of revenue generation. In contrast, the AC classes, including the second AC, third AC, and AC chair car, comprise 32 percent of revenue generation. The remaining 1 percent of revenue was generated from first AC.
One of the key reasons behind the loss in Indian Railways has been attributed to the cross-subsidisation of passenger fares, which are deliberately set below the service costs. The long-distance contributes to 73‒76 percent of losses, of which 3‒4 percent are due to concessions to students and senior citizens, among others.[12] The recovery cost in suburban trains is as low as 40‒57 percent, with the railways earning only 36 paise for every INR 1 spent on short-distance commute within cities. Rising input costs covering fuel, maintenance, and staff have seen a sharp increase while revenue earnings continue to remain poor, constraining reinvestments and perpetuating inefficiencies.
According to NITI Aayog, the long-distance passenger segment accounts for about 77‒80 percent of the losses.[13] Furthermore, Indian Railways, being a government-controlled organisation, is plagued by overstaffing, operational inefficiency, and poorly targeted investment.[14]
The government has actively promoted public‒private partnerships (PPPs) during the 12th Five-Year Plan (2012‒17) by raising INR 1 trillion through PPP projects.[15] The areas considered under the PPP, as identified, includes:
However, PPPs in railways have been driven by the increasing competition from the road and aviation sectors, which have witnessed increased investment. PPP is a significant challenge in the railway sector due to its specific technological base and railways being a public and affordable means of transport. Other factors―such as project size, scope, cost, risk profile, the life cycle of the project's infrastructure, expertise available in the market, and public sector policies―also play an essential role in determining the public‒private partnership.[16] The monopoly of the railways has hindered the entry of private players, further compounded by the absence of supportive schemes for the private sector, resulting in the lack of private participation.[17] Additionally, PPP adoption in the railway sector remains limited, compared with road and aviation, partly due to the complex technology base, the public-good nature of railways, and high-risk investment profiles. Other constraints include project scale, lack of clear policy direction, and limited market expertise.
In this context, this paper aims to critically examine the evolving discourse around the privatisation of Indian Railways, with a three-fold objective, which is to:
propose the way forward, aimed at improving operational efficiency while safeguarding public service obligations.
The study adopts a mixed-methods approach. Primary data were gathered through focus group interviews with four domain experts, each with over three decades of experience in railway planning, operations, and maintenance. Secondary data include a review of books, peer-reviewed journal articles, working papers, and financial reports from the past decade. Together, these sources offer an evidence-based perspective on the feasibility and implications of introducing private trains in the Indian railway ecosystem. A key limitation of this paper is its exclusive focus on the privatisation of passenger train operations. The analysis does not extend to the freight segment of Indian Railways, which remains outside the scope of this study.
Japan's railway transportation market is dominated by passenger and intercity services. In 1990, the market share of railways in Japan was 30 percent while the road and aviation sectors accounted for 65 percent and 4 percent, respectively.[18] Japanese National Railways had to rely on government funding, which led to a debt surge of 25 trillion yen.[19]
The privatisation of Japanese National Railways in 1987 resulted in the formation of seven new companies and a reduction in the number of employees from 400,000 in 1980 to 191,000 in 1994.[20] The years leading to the privatisation of the Japanese railways were marked by a year-on-year increase in train fares, labour disputes, and user distrust, resulting in fewer customers. The scenario post globalisation was characterised by a declining share of the railways against roadways and airways; this prompted Japanese National Railways to keep pace with its competitors by investing in facilities and equipment and finding new ways of survival. Simultaneously, the privatisation of railways saw a rise in passenger traffic by 20 percent in 1993 and a stabilisation of the market share by 21 percent. Privatising the three Japanese railways, namely JR East (East Japan Railway Company), JR Central (Central Japan Railway Company), and JR West (West Japan Railway Company) has helped achieve a positive balance sheet, despite the infrastructure costs and the inherited liabilities of Japanese National Railways.[21] Some factors behind the success of the privatisation of Japan’s National Railways included: strong political support; the prioritisation of involving experts with knowledge and expertise in the sector over the engagement of politicians and bureaucrats; restructuring and focusing greater attention on short-term issues before privatisation; and adequate management incentives provided early in the reform to facilitate the process. Lastly, privatisation has helped reduce political intervention, the main culprit in the sluggish modernisation of Japanese railways.[22] The downside of privatisation was the lack of will on the part of private companies to maintain competitiveness, particularly in ways that would benefit tourists and foster collaboration with other transport modes to improve connectivity.
During the 1960s, the United States (US) saw a gradual decline in railway transportation with the growth of the road sector through interstate highway connectivity and air travel. In 1970, with the country gripped by the Vietnam War and internal turmoil, political and economic pressures prompted Congress and supporters to propose a national rail service provider. The resulting Rail Passenger Service Act of 1970, signed by President Richard Nixon, laid the foundation for the creation of Amtrak in 1971.[23] In its very first year, Amtrak carried 16 million passengers.
The company overhauled its facilities and pursued the Northeast Corridor improvement project to facilitate the start of high-speed services between Washington and Boston. The 1973 oil crisis further contributed to the growth in Amtrak's passenger ridership.[24] Since its inception in 2000, the Northeast Corridor has been the busiest railroad, operating more than 2,200 trains and carrying more than 250,000 passengers. The corporation employs 25,000 people. Since its inception in 1971, Amtrak, which is America’s railway system, has been sharing its track with freight railroad companies and paying for track usage, based on the avoidable cost formula that factors in gross tonnage and speed.
The British railways underwent privatisation under Prime Minister John Major in 1997. Before privatisation, the railways was in a state of decline due to wartime neglect of infrastructure, dwindling traffic, defunct lines, stations, and depots, and overstaffing. This resulted in acute financial problems for the British railways that failed to make any profits in 1955[25] and the establishment of the Stedeford Committee in 1961. The committee recommended curtailing unprofitable lines, closing many railway lines and 4,000 of the 7,000 railway stations, and retrenchment of railway employees. The report received criticism from all quarters, resulting in partial implementation. However, a few recommendations were implemented between 1963 and 1970. The total length of the railway network was reduced from 29,117 kilometres in 1962 to 18,889 kilometres in 1970.
Another attempt to restructure the railways was made in 1980 by Sir Robert Reid, who was the Chairman of the British Railways Board. He introduced the Business Sector approach to the railway sector, with each sector representing a distinct market segment based on the type of service and needs of passengers. The British railways consisted of five business sectors, namely: InterCity (long distance passenger traffic); North South East; which covered commuter service around London; Provincial, which covered unprofitable, low-density passenger services in the countryside; freight; and parcels. Each sector was headed by a sector manager and designated as a profit centre. The Conservative government returned to power in 1992, with John Major as prime minister. Although the previous government under Margaret Thatcher had already privatised a large share of the public undertakings, British railways remained untouched, reflecting the Thatcher government’s reluctance to privatise the railways. Given the uncertainty around his return to power in 1997, Major wanted to complete the task of privatisation before the next elections. At that time, the railways were being provided a subsidy of £1.7 billion per year. As a result of the hasty restructuring of the railways, many of its problems were attributed to the hurried reorganisation, with the increase in ticket prices resulting in a modal shift from railways to airlines.
The idea of privatising the Indian Railways is not new. In the pre-Independence period, much of the early construction was undertaken by private companies before the network was brought under government control. This remained the case until 1991, when the first private railway entity, . Figure 2 shows the timeline of the privatisation of Indian Railways.
Figure 2: Privatisation of the Indian Railways: A Timeline
Source: Authors’ own compilation
Since its inception in 1853, the railways (until 1869) were developed by private players under the guarantee system introduced by the British government.[26] Eight companies were formed under agreements with the East India Company, which guaranteed a 5 percent annual return on capital invested in infrastructure and operation of freight and passenger services for a period of 25‒50 years.[27]
The guaranteed system was criticised, with the companies shifting their liabilities to the government, amounting to INR 76 crores. In contrast, the companies retained all profits, drawing criticism from Lord Lawrence, former Governor-General of India; his concerns, coupled with waning investor interest, led to the gradual discontinuation of the guarantee system.[28] As observed by G.V. Joshi, an Indian economist, the system in place between 1844 and 1869 acted as a subsidy to private agents involved in the construction and operation of railways.[29]
At the turn of the new millennium, the railways faced its first financial crisis, exposing the structural fragility of the railway sector. With a financial balance of INR 359 crores, the railways struggled to manage ageing assets, resulting in a low growth rate of 3 percent and subnormal profits. The precarious financial position can be attributed to substantial subsidies, considering that the railways serve as a mass transport provider. As of 2017, the subsidies amounted to INR 8.9 billion, with the railways recovering only 57 percent of its operating costs.[30]
The government then constituted a high-powered committee led by the former Deputy Governor of the Reserve Bank of India, Rakesh Mohan at the time of the committee’s appointment. The committee emphasised the need to identify areas with potential for PPPs and recommended measures for financing in a high-growth scenario. The potential investment areas identified under the proposed privatisation model included the station redevelopment project, which encompassed development of real estate, operation, and maintenance of railway stations, and construction of buildings for railway offices, rest houses, and residential accommodation. Another potential area identified by the Rakesh Mohan Committee Report[31] included private intercity train operations, similar to the container train operations introduced by the railways. The report also emphasised the following reforms:
Under the privatisation scheme, the government proposed to run 150 trains, constituting 5 percent of the total trains on the Indian railway network. The three trains being run by the Indian Railway Catering and Tourism Corporation (IRCTC) have limited operational scope with IRCTC-only onboard services. Private entities will be responsible for maintaining train rakes and onboard services and will be given the right to fix fares and stoppages and operate trains on pre-defined paths. Operating private passenger trains is easier than running private container transportation since they are scheduled and, therefore, have train paths. The rationale is that IR's operating surplus is low for a private train, and if the private sector takes it over, it can charge higher tariffs, run it at a lower cost, and share part of its operating surplus with IR. The gross revenue generated by the train must be compared with the share of the surplus received from the operator, which may not always be higher.
The stated objective of IR is to reduce its capital expenditure on rolling stock and associated expenses for establishing complementary facilities (including human resources operational spending) for the maintenance of additional trains, which are needed to meet the ever-increasing demand (a reasonable assumption, given India’s growing population and economy). One reason for this is the introduction of newer train/trainset technology, which offers higher speed potential, alongside IR's ongoing developments. It is anticipated that IR will simultaneously be able to invest in the infrastructure necessary to enhance higher-speed passenger travel, and improve capacity and quality at terminals.
Despite their prospects, private train operations for Indian Railways could potentially be met with specific challenges, to be discussed in turn in this section.
The privatisation of railways will render many jobs unviable and lead to a reduction in the workforce.[32] Throughout the history of railway reform, there has been an increase in productivity with advancements in technology, new investments, commercial management practices, and reform processes. During a reform process, it is also essential for human resources managers to determine staffing requirements across various functions and develop rational staffing levels. When privatisation was first proposed in 2014 under the Debroy Committee, there was a growing concern over employability.[33]
During the privatisation of an entity, such as Indian Railways, the key objective of private stakeholders is to maximise profitability, which involves streamlining operations and reducing overhead costs. This may lead to job reductions or alterations in job roles, impacting the stability of workers who have depended on state-run sectors. Privatisation may also change the types of jobs available, necessitating various kinds of skills and displacing workers who have not been upskilled. This transition can be difficult without sufficient training and support programmes to assist existing employees in adapting to the new roles and technologies introduced by private entities.
The entry of private players could result in a predatory pricing strategy, aimed at attracting higher passenger traffic volumes, potentially boosting short-term profitability. However, such pricing strategies lead to uneven pricing of train fares, reduced maintenance budgets, and compromised safety standards. While privatisation could enhance efficiency and foster innovation within Indian Railways, it also raises concerns about its long-term sustainability. A reduction in maintenance budgets may also erode service reliability and public trust in rail travel over a period of time, ultimately undermining the safety and integrity of rail operations. Another concern related to the participation of private players is their prioritisation of routes and services, which could generate higher profits, potentially at the cost of less economically viable routes. These underserved routes may be crucial for connecting remote or less populated regions, and their neglect can carry significant social and economic implications, especially for people who rely on train services for their daily commute and access to livelihood opportunities.
The privatisation of train operations is likely to drive fare inflation, diverting passenger traffic to low-cost carriers (LCCs). Private entities seek to recoup investments and maximise profits, often leading to higher fares than those charged by state-run services. Such an outcome can influence passenger preferences and travel behaviours. In the case of higher train fares, passenger traffic can shift from railways to LCCs, particularly for mid-range travel distances.[34] Low-cost carriers offer competitive pricing and often provide discounted fares, which can help attract more passengers. Additionally, travel time by air is less, compared with that in competitive modes, such as roads and railways. A rise in train fares could result in increased travel by air, congestion at airports, and the necessity of further investments and expansions, implying socioeconomic and environmental costs.
Due to uncertain government policies, private players may be unwilling to invest in the railway sector. While promoting private train operations, it is imperative that the government also ensures stability in decision-making. Frequent shifts in the government stance on sectors that are part of foreign investment will hurt future prospects for private sector participation in train operations. This could manifest in the form of delay in project initiation, cautious capital deployment, and higher costs as investors factor in the risks of policy changes into their financial demands. It is, therefore, important that governments play an essential role in creating and maintaining a transparent, stable, and conducive policy environment. This approach will not only help attract investment, but will also ensure smoother project execution and long-term sustainability of public‒private partnerships in rail infrastructure.
The marginal cost of operating a train may be significantly lower than the average cost, meaning Indian Railways will save on the marginal cost, not the average cost. The marginal cost mentioned here refers to the cost of running an additional train, which includes both direct and indirect costs. The direct costs include fuel, additional crew, and incremental maintenance. The other costs involve average costs, which include the total operating costs divided by the number of trains operated, thus encompassing fixed costs such as infrastructure maintenance, station services, and overheads. In the context of Indian Railways, if the marginal cost of operating an additional train is significantly lower than the average cost, it reflects the possibility of running an additional train at a substantially lower cost than the overall cost per train.
This situation also highlights underutilisation. There is capacity to increase service frequency or routes without a proportionately significant increase in the total cost. This strategy is particularly effective in denser routes where additional services can attract more passengers without any substantial increase in operational complexity or costs. Thus, while saving on marginal costs through optimisation of train frequency and utilisation, the broader financial dynamics must also be taken into consideration to ensure that such decisions are sustainable and contribute positively to the overall economic health.
A clear policy framework aligning privatisation efforts with national transport strategies should be developed. Coordination between the Central and state governments, railway authorities, and private entities is necessary to streamline operations and prevent conflicts. A gradual, well-structured approach to privatisation should be adopted to avoid disruption in services. Initial phases can focus on non-core operations, such as catering, station management, and freight services, before extending privatisation to passenger operations. A phased model allows for assessing impacts and making necessary adjustments. This brief makes the following policy recommendations for increasing private participation in railway operations in India:
Vertical separation or 'unbundling' refers to separating rail operations, such as train operations and marketing, from other railway functions. Other rail functions include activities such as keeping infrastructure accounts. Through vertical separation or ‘unbundling’ of the railway hierarchy, general managers and divisional railway managers at the zonal level will have greater autonomy to decide on developmental affairs of their respective zones, as is the case in Amtrak, where the heads of various railroads are given autonomy in deciding on development schemes for their respective railroads.
This approach separates infrastructure and railway operators into autonomous entities, each with dedicated capitalisation, balance sheets, and personnel. Institutional separation can be observed in models like public ownership of infrastructure in Portugal and Sweden or private ownership in countries such as the United Kingdom (UK). In the UK, the privatisation and vertical separation of British Rail into numerous train operating companies (TOCs) have helped introduce competition and improve efficiency. The restructuring of the railway system has allowed for a more focused approach on management and specialisation in both passenger and freight services. There has been an increase in both passenger and freight traffic due to improved reliability and service offerings. Over time, this has also resulted in reduced subsidies from the government, benefitting both tax payers and users through a reduction in the financial burden on the public while improving service standards.
Government policies need to be more stable to gain the confidence of investors and private players who are the primary clientele for private train operations. The government must also strike a balance between domestic needs and requirements of potential private players to ensure the smooth functioning of private trains. This can be achieved through clear regulatory frameworks outlining the rules, obligations, and expectations for all stakeholders involved. It is also essential that the government proactively engages with the stakeholders through consultation, feedback sessions, and their inclusion in the policy-making process. Further developing incentive structures aligning with the long-term policy goals can act as a catalyst for private players to invest in private train operations that support broader economic and social objectives. Some examples of incentives to private players include tax breaks, subsidies for pioneering new technologies and services or financial support for developing infrastructure in underserved areas.
The entry of private players, though conducive to greater modernisation, also raises concerns about unfair pricing, potentially undermining train maintenance and operational efficiency. The government must, therefore, bring into effect the proposed tariff regulatory authority for capping the prices of train tickets to ensure accessibility to all people. The authority would comprise the chairman and four members of the apex body, who would play an important role in developing an integrated, transparent, and dynamic pricing mechanism for the passenger and freight segments of Indian Railways. This entity will also advise the government on tariff formulation, based on the cost of operations and factors hindering it, to help generate the requisite surpluses for sustainable future growth. A strong, independent regulatory body should be established to monitor pricing, service quality, and competition. This entity should have the authority to prevent monopolistic practices, ensure compliance with service standards, and protect consumer interests. Transparent guidelines should be laid out for private players to maintain fair pricing and service levels.
The government must develop effective mechanisms for addressing employee grievances, which would help enhance employee satisfaction and retention by providing a reliable, respectful platform for early conflict resolution, thereby preventing escalation into legal disputes or labour unrest. To help solve union issues, the Ministry of Railways has devised a negotiation system with the Permanent Consultative Machinery (PCM), and the Tribunal and Joint Consultative Machinery (JCM). The railways have also created the Participation of Railways Employees in Management (PREM) scheme to evaluate and improve efficiency, using technology and quality of service provided to passengers and goods transportation.
The government must safeguard the interests of lower-income passengers by imposing fare caps and mandatory service obligations. Private operators should be required to operate a mix of premium and affordable services to prevent exclusion of economically weaker sections of society. Competitive bidding processes should be designed to attract multiple private players and prevent monopolistic control by a few entities. PPPs can be leveraged to balance risk-sharing between the government and the private sector, ensuring efficiency gains without compromising on accessibility. Regular assessments should be conducted to evaluate the impact of privatisation on service delivery, efficiency, and passenger satisfaction. Key performance indicators (KPIs) should be set to measure the effectiveness of private participation and guide policy refinements. Policymaking must be inclusive, involving consultations with railway unions, passenger associations, and industry experts. Transparent discussions will help build public trust and address concerns related to service disruptions and pricing policies.
By incorporating these recommendations, Indian Railways can ensure that privatisation contributes to enhanced efficiency, financial sustainability, and improved passenger experience while safeguarding public interest and equity considerations.
The overarching objective of introducing private train operations, as advocated by the government, is to enhance the passenger traffic share by improving the quality and range of services offered by Indian Railways. The involvement of private players in train operations and maintenance is expected to introduce value-added services such as doorstep baggage pickup and drop-off, protection against in-transit theft, and, for the first time, passenger compensation for delays. In exchange for utilising existing railway infrastructure, private operators will be required to pay haulage charges.
However, insights from international experiences, particularly the British railway privatisation, underscore the need for a carefully calibrated approach. A comprehensive assessment of operational feasibility is crucial to determine the extent and nature of private sector participation. The economic dynamics of railway operations present unique challenges; for instance, the marginal cost of running an additional train is often significantly lower than the average cost, implying that cost savings accrue primarily at the margin rather than across the board. Furthermore, privatisation of railways differs markedly from that of other sectors, such as aviation and telecommunications.
In aviation, private operators lease aircraft while the government provides essential infrastructure like runways and airports, charging operators for usage. Similarly, in telecommunications, private entities secure bandwidth through bidding and independently manage service delivery. For private train operations to be sustainable, a clear delineation of responsibilities between private operators and the government is essential, ensuring minimal interference from regulatory bodies while maintaining oversight. Striking this balance will be critical to fostering a competitive environment and ensuring the long-term viability of private sector engagement in India's railway modernisation efforts.
Nandan H. Dawda is Fellow, Urban Studies, ORF.
Chitresh Shrivastva is Adjunct Faculty member, Department of Media Studies, CHRIST (Deemed to be University), Bengaluru.
All views expressed in this publication are solely those of the authors, and do not represent the Observer Research Foundation, either in its entirety or its officials and personnel.
[1]India Brand Equity Foundation, “Road Infrastructure in India,” October 12, 2020, https://www.ibef.org/industry/roads-india.aspx
[2] India Brand Equity Foundation, “Road Infrastructure in India”
[3] India Brand Equity Foundation, “Road Infrastructure in India”
[4] Ministry of Railways, Government of India, Indian Railways Year Book 2023–24 (New Delhi: Ministry of Railways, 2023), https://indianrailways.gov.in.
[5]“Indian Railways Attracts Rs 42,000 Crore FDI: Govt,” Financial Express, May 6, 2016, https://www.financialexpress.com/economy/indian-railways-attracts-rs-42000-crore-fdi-govt/250061/
[6] UN, Restructuring the Railways, New York, United Nations Economic and Social Commission for Asia and the Pacific, 2003, https://www.unescap.org/sites/default/files/RailwayRestructuring.pdf
[7] Department of Economic Affairs, Ministry of Finance, Government of India, Report of the Task Force: National Infrastructure Pipeline (Volume I) (New Delhi: Ministry of Finance), https://dea.gov.in/sites/default/files/Report%20of%20the%20Task%20Force%20National%20Infrastructure%20Pipeline%20%28NIP%29%20-%20volume-i_1.pdf
[8]Ministry of Railways, Government of India, https://pib.gov.in/PressReleasePage.aspx?PRID=1806617
[9]Ministry of Railways, Government of India, https://pib.gov.in/PressReleasePage.aspx?PRID=1806617
[10] Bansal Group, “Redevelopment Project of Rani Kamlapati Railway Station,” https://bansalgroup.in/Redevelopment-Project.php?
[11] Ministry of Railways, Rail Bhavan, Givernment of India, Report of the Committee for Mobilization of Resources for Major Railway Projects and Restructuring of Railway Ministry And Railway Board (New Delhi: Ministry of Railways, 2015), https://indianrailways.gov.in/railwayboard/uploads/directorate/HLSRC/FINAL_FILE_Final.pdf
[12]Prachee Mishra, State of Indian Railways, PRS Legislative Research, 2018, https://prsindia.org/files/policy/policy_analytical_reports/State%20of%20Indian%20Railways.pdf
[13]Bureau of Research on Industry and Economic Fundamentals, Improving Rail Efficiency and Share in India’s Freight Transport, NITI Aayog, 2023, https://www.niti.gov.in/sites/default/files/2023-03/Efficiency%20and%20competitiveness%20of%20Indian%20Railways.pdf
[14] “Improving Rail Efficiency and Share in India’s Freight Transport, 2023”
[15] Ministry of Railways, Government of India, Report of the Expert Group for Modernization of Indian Railways (New Delhi: Ministry of Railways, 2019), https://nfr.indianrailways.gov.in/railwayboard/uploads/directorate/infra/downloads/Main_Report_Vol_I.pdf
[16] Rachna Raghuram, “Framework for Structuring Public-Private Partnerships in Railways” (paper presented at the World Conference on Transport Research, Rio de Janeiro, 2013), http://www.wctrs-society.com/wp-content/uploads/abstracts/rio/selected/2078.pdf.
[17] “Report of the Committee for Mobilization of Resources for Major Railway Projects and Restructuring of Railway Ministry and Railway Board”
[18] C. J. Kim and M. C. Huang, The Privatisation of Japan Railways and Japan Post: Why, How and Now, Tokyo, Asian Development Bank Institute, 2019, https://www.adb.org/sites/default/files/publication/539746/adbi-wp1039.pdf.
[19] “The Privatisation of Japan Railways and Japan Post: Why, How and Now”
[20] S. Konno, “JNR Privatization: JR's First 10 Years and Future Perspectives,” Japan Railway & Transport Review, no. 13 (1997), https://www.ejrcf.or.jp/jrtr/jrtr13/pdf/f34_kon.pdf .
[21] Fumitoshi Kurosaki, “Reform of the Japanese National Railways (JNR),” Network Industries Newsletter 18, no. 4 (2016),
[22] Kurosaki, “Reform of the Japanese National Railways (JNR)”
[23] McHugh Joe, Introduction to Amtrak (Kalmbach Books, 2011), pp144, https://www.amazon.in/s?i=stripbooks&rh=p_27%3AThe%2Bstaff%2Bof%2BAmtrak&ref=dp_byline_sr_book_1
[24] Joe, Introduction to Amtrak
[25] R Kopicki et al., “Best Methods of Railway Restructuring and Privatization,” CFS discussion paper, 2013, https://regulationbodyofknowledge.org/wp-content/uploads/2013/03/Kopicki_Best_Methods_of.pdf
[26] R. R. Bhandari, Indian Railways: Glorious 150 Years (New Delhi: Publications Division, Ministry of Information and Broadcasting, 2006), pp 252, https://www.amazon.com/Indian-Railways-Glorious-150-years/dp/B008RYBAHI
[27]Chitresh Shrivastva, “Modernising India's Railway: The Opportunities and Challenges of Private Train Operations in India,” SSRN, 2023, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4385808
[28] K. B. Verma, Reforming the Railways in Indian Railways: Strategy for Reforms (New Delhi: Foundation Books, 2015), pp 97–126.
[29] Bipan Chandra, “Economic Nationalism and the Railway Debate, circa 1880–1905,” in Our Indian Railways: Themes in Indian Railway History, ed. R. Srinivasan, M. Tiwari, and S. Silas (New Delhi: Foundation Books, 2006), 77–92.
[30] “Railways Operating Ratio in 2017-18 was 98.44%, Worst in 10 Years: CAG,”Mint, December 2, 2019, https://www.livemint.com/budget/news/railways-operating-ratio-in-2017-18-was-98-44-worst-in-10-years-cag-11575287718680.html
[31] National Council of Applied Economic Research, Government of India, The Indian Railways Report 2001: Policy Imperatives for Reinvention and Growth (New Delhi: Ministry of Railways, 2001), http://rakeshmohan.com/docs/Railway_Report.pdf
[32] Nikhil Verghese Mathew, Analysing the Case for the Privatization of the Indian Railways, Strategic and Policy Research Foundation (SPRF), 2021, https://sprf.in/wp-content/uploads/2021/01/Analysing-The-Case-For-The-Privatization-of-The-Indian-Railways.pdf
[33] Dheeraj Mishra, “In 5 Years Since Covid Flip, Indian Railways’ Revenue from AC Classes Surpasses Non-AC,” The Indian Express, February 25, 2025, https://indianexpress.com/article/india/in-5-years-since-covid-flip-in-indian-railways-revenue-from-ac-non-ac-9854585/
[34] Shikha Juyal et al., Transforming India’s Mobility: A Perspective, NITI Aayog and BCG group, 2018, https://e-amrit.niti.gov.in/assets/admin/dist/img/new-fronend-img/report-pdf/BCG.pdf
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Dr Nandan H Dawda is a Fellow with the Urban Studies programme at the Observer Research Foundation. He has a bachelor's degree in Civil Engineering and ...
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Chitresh Shrivastva is c, Department of Media Studies, CHRIST (Deemed to be University), Bengaluru. ...
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