Railways not a company where you can transfer ownership to a private entity: Suresh Prabhu

In a chat with ET Now, Suresh Prabhu, Railways Minister, shares his views on why privatisation is a bad word for the railways. Excerpts:

ET Now: Why is privatisation such a bad word for one of India’s largest public sector entities?

Suresh Prabhu: The word privatisation pre-supposes that there is a transfer of ownership of that enterprise to a private company. Railways is not even a company, it is a government department. So, how do you transfer the ownership of railways to someone else?

Secondly, no committee has ever recommended a privatisation of the kind that has been envisaged. The Bibek Debroy Committee also has not recommended it.

Thirdly, even if theoretically, any organization in the world has the capacity to take privatisation of 51% of whatever is the value of railway, the railways could be valued at several trillion dollars. Would anybody have the ability to buy that? So where is the question of privatisation?

ET Now: If I may rephrase the question, the debate is about a larger play for the private sector. Why is it that very few avenues in the railways are open to the private sector?

Suresh Prabhu: We are trying to do something to make railways run better. We need investment. Why do we need investment? Because investment is the only way railways can become better. Since private capital is not coming in, we are putting in public money. If private capital wants to come into certain areas, which does not impede upon the public interest of the country - for example in the case of private freight terminals or station development etc - it is definitely possible within the framework that we are trying to create.

ET Now: At this stage, because your funding requirement is largely being taken care of, there were a lot of sovereign funds that were interested. Are you talking to any of them at this stage?

Suresh Prabhu: There is a huge potential to get pension funds of different countries to invest into India. You have a possibility of using sovereign wealth fund of other countries to be invested in India at a time when India’s economy is going to be the fastest growing economy, and at a time when there is no other country in the world which will have appetite for investment into infrastructure as much as India has.

ET Now: Railways has a lot of land parcel. People think that should be monetised. What do you think about this?

Suresh Prabhu: About 80-85%, maybe more land is next to the tracks. We will need that land. The second parcel of land is lying maybe near the stations. So we are trying to create warehouses and we are trying to do that to make businesses operate. That is how we monetise it.

There may be some open space somewhere, but unfortunately they may already be encroached. So theoretically the railways seem to have land, but when we take a broader look at these issues, it is more difficult than what it seems to be.

I do pay four times higher than the market price for the railways to acquire the land. If I pay four times more, will the passenger be interested to pay four times more fare? Will a freight operator be willing to pay me four times more freight for that?