Twenty years ago, air travel was a distant dream for most Indians. We had Indian Airlines and Air India, both creaky government monopolies, run (rarely on time) from equally creaky government-run airports. Prices were high, service was poor. Like almost everything else in India from the Nehruvian era, it sucked.
Then something happened. The skies were opened up. Private airlines came into the picture. Bit by bit, the government fought back the resistance from the employee unions and privatized the airports. That’s when a whole new world opened up.
The aspiration associated with flying at the time is perfectly captured in this touching ad from Air Deccan in the 2000s.
Today, India has the third-highest number of airline passengers in the world, just after the United States and China. Our big airports rank among the best, most comfortable in the world. But these big airports, most of them refurbished just a decade ago, are bursting at the seams already with traffic. From 2014 to 2018, passenger traffic grew at double digits every year.
Smaller airports are buzzing too. A little over ten years ago, Ranchi airport had two flights a day, one from Delhi and one from Kolkata (both Air India). Today, there is a long line to enter the airport at almost every hour of the day. The newly built terminal already feels a little cramped. After all, air traffic at Ranchi grew 27% last year. The year before, it grew by a staggering 72%!
Not everyone in India can fly yet, but the middle class surely can. And did you know that on a per-kilometre basis, flying in India is the cheapest in the whole world?
The private sector gave us better mobility, better service, better standard of living and more employment opportunities. And lowered the prices! Well, of course, it did.
How did Indian aviation become such a success story? Because we took the government out and brought the free market in.
What else is wrong with India? Why not apply the same cure to it? Well, we have the Railways.
The prices aren’t high. But the service is generally bad. And there is little to no accountability. Because of the politics, passenger fares did not rise for decades on end. At one point, the Railways had become a rather dangerous mode of travel. We have seen some improvements since then, but we are clearly nowhere compared to what we expect from developed nations.
There is only so much the government can do. And finally, the Railway is getting ready to welcome private players. Tata, Adani and Hyundai queue up to run private trains and this is how Indian Railways is set to reform.
The new chapter began with Delhi Lucknow Tejas Express last year, leased from Indian Railways and operated by IRCTC which is now a publicly-traded company. By the end of this month, there will be three such trains. By 2024, we will likely have hundreds of such trains, running on 100 routes identified by the government.
This is real reform that India has been expecting from Modi sarkar and it will change the face of the nation. If we know anything about govt bureaucracies, we can guess that the sheer resistance that this move must have faced would be mind-boggling.
But it seems that things are finally smooth and on track. And private players are lining up for the big opportunity. Tata, Adani and Hyundai are just the beginning. As the Mint article notes, Siemens, Alstom and Bombardier are all interested.
Who would not be interested? Railways cater to hundreds of millions of people in the world’s fastest-growing major economy (yeah…we got that distinction back). The possibilities are simply endless.
All it took was to stop treating Indian Railways as a liability and start seeing them as an asset. The reach of the Railway is phenomenal across the length and breadth of India. Who would not want a piece?
It is expected that private players will be given control over the prices. In the short term, this means we can expect the prices to be generally higher than regular ticket fares. So where does that leave the poor?
No problem. The old Railway is not going anywhere. Instead, it is giving an option to folks who can afford to spend more. And when that happens, the economy grows, more wealth is created and everyone does better. Which would include the very poor who may not be able to afford the new private trains?
Here is what was wrong with the old system (and everything socialist in general). To make sure that the poor could afford something, we kept everyone locked in at the same level, not allowed to move. While that may sound like sharing and caring in a child’s bedtime story, it is a very bad idea in practice.
Because when everybody is trapped at the same level, nobody can go out there, take a step ahead and create wealth. Things never improve for anyone. Is that better?
Private investment will bring more capital to our railways. More job opportunities. It will stimulate our economy. Who wins in this? Everyone, including the poorest person in India.
Roads don’t just help those who can afford to buy cars. They help the ones who work on building the road, the ones who work on building the cars, the ones who start businesses along the highways or find jobs in them.
When the sleepy old railway station turns into a thriving hub of economic activity, everyone wins.
There is no doubt that old socialists will try to create all sorts of fears in people about the privatization thrust within Indian railways. You will see them on TV screens and internet columns shortly, breathing rhetoric, crying about the poor.
Don’t forget that it is this rhetoric that kept India stuck at one place for 40 straight years. It is this rhetoric because of which we are behind the Chinese today. What this rhetoric has done to our country is very very cruel indeed.
So ignore them. And remember that these intellectual talking heads are making a lot more money today precisely because the media is a vibrant free market. The old Doordarshan monopoly is gone. Dismantling the government monopoly helped these talking heads grow their personal bank accounts. Don’t let them talk us out of the process which can do the same for others.