Tejas Express is the REAL reform: Indian Railways on road to privatisation

Tejas Express (image: businesstoday.in)

You have to give it to the media management genius of this government. They know exactly when to do a soft launch.

Tejas Express launched.

And just like that, with a bare minimum of fanfare, India’s first private train is on its way.

Of course it is not exactly a private. Rather the train is run by IRCTC, a corporation that is owned by the state. Or is it?

IRCTC IPO oversubscribed by 112 times.

As the Lucknow  – Delhi Tejas Express rolled off, the Initial Public Offering (IPO) for IRCTC was launched into the market. Now you can buy a piece of the Railway in India.

Yeah, that does make Tejas India’s first privately run train. The sheer scale of this reform is too big for words. We have always been familiar with the old steam engine logo of the Indian Railways. And its attitude, which was exactly like that steam engine: hopelessly out of date.

At some point, we needed to realize that if we want clean stations, clean compartments and trains that run smoothly and on time, we cannot have a socialist big government monopoly. We will need the private sector. For some basic accountability. If Tejas Express is delayed by an hour, each passenger gets Rs. 100.

It is not about one hundred rupees, nor one train going from Lucknow to Delhi. You have to understand what this represents. Imagine the heads of the government babus that would have exploded at the idea that railway passengers are actually paying customers and deserve the dignity of being treated as such.

One must also understand the necessity for a soft launch, perhaps even a launch by stealth. Our national character is still in the deep red, poisoned by decades of socialist rhetoric and indoctrination everywhere, from media to our education system. We just don’t have the consensus yet for such a big lunge towards free market capitalism. Cutting through the red tape of hidebound socialist babus and the blob of vicious unions to achieve India’s first private train would have been a Herculean task. The last thing the government needed was for the shrill media to come in and create more trouble.

Funnily enough, there are already other Tejas trains in operation, all fully owned and operated by Indian Railways and not IRCTC. It is likely that the confusion about names has been created for a reason, further adding to the “softness” of the launch.

Think about the political bottleneck that the Railway had become. For populist reasons, decades pass without regular passenger fares being raised, even to meet the bare minimum requirement of inflation. Of course, like all kinds of socialism, you have to pay somewhere. The government has to keep raising the fares for cargo. The average person pays for “cheap” rail travel by paying more for goods that have to be brought by train. And of course, by undertaking a potentially unsafe and unpleasant journey on a perennially underfunded railway.

At the same time, AC and first class fares were raised to absurd levels, to the point where it became cheaper to just fly.

One of the things that Modi government did early on was get rid of the Railway Budget and merge it with the Union Budget. A simple, no cost change that made a big difference. By reducing the glamour quotient of the Railway Budget, we could do away with the annual ritual of a socialist boondoggle where fares never rise and the Railway Minister showers new train connections on whichever happens to be their home state.

And now, a private train. One can only hope that the IRCTC Tejas network will expand, the government will cut its stake further and further in IRCTC. And finally we will have multiple private corporations running trains. Either their own trains or by leasing existing trains from the Indian Railways.

This is real reform. And it will pay off just like the lifting of government monopoly on air travel did. The new Tejas train has no concessional fares for anybody and dynamic pricing for all. So, will it leave out those at the bottom of the ladder?

No! How could it? What did we get when we opened up the airline market? We had more people taking flights than ever before (And believe you me, the elites are still not over it).

This kind of reform will only lead to a better railway for all.

This kind of reform also signifies Modi sarkar finally becoming comfortable embracing its fundamental free market instincts. In the first term, it had to be all about welfare. Or the Indian people, addicted to socialism, would simply relapse to the Congress era by 2019. You had to take the enabler out of the equation first. This is why the second term for Modi was so important. Finally free to remake India. Low taxes. Labor reforms. Disinvestment. Privatization. This is what it has to be all about. From now on. We’ve already lost too many decades to wait any longer.

This post was last modified on October 8, 2019 9:43 am

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