While Indian Railways remains a strategic lifeline and the country’s largest public service provider, sustaining its growth will require a shift from tight state-controlled operations towards more market-oriented governance and innovative partnerships for ensuring its financial sustainability. This was the central message emerging from Railway Conclave 2.0 on the theme “Government has No Business to Be in Business: Possibilities and Quagmire of Privatisation in Railways”, organised by the Chintan Research Foundation (CRF) at the India Habitat Centre, New Delhi.
The high-level dialogue brought together policymakers, former railway leaders, industry representatives, and infrastructure experts to deliberate on how Indian Railways can transition into a financially robust, technologically modern and socially inclusive transport enterprise. The event featured a special address by Mr Suresh Prabhu, former Union Minister of Railways, and a welcome address by Mr Shishir Priyadarshi, President, CRF. The sessions were chaired by Mr M. Jamshed, Distinguished Fellow, CRF and former Member (Traffic), Railway Board.
In his Special address, Mr Suresh Prabhu underlined both the scale of India’s dependence on railways and the complexity of reform. “India’s large population is dependent on railways,” he noted, emphasising that any reform agenda must protect accessibility and affordability.
He stressed that capacity creation is the bedrock of any serious privatisation or partnership strategy: “Indian Railways can function only when there is track capacity. For the stock to roll, more and more tracks should be built so that private companies can come in and work.” At the same time, he cautioned against ideological approaches: “Railways privatisation shouldn’t be for the sake of privatisation. First, we must identify the problem, then we should move towards privatisation. I am not against privatisation or for privatisation; I work towards making the system work in whichever way is practical, not ideologically.”
Mr Prabhu highlighted how technology and management reforms can transform service delivery. “Lakhs of complaints were solved through online grievance redressal systerm. Unless we focus on holistic planning, it won’t work as a long-term strategy,” he said, urging Indian Railways to look beyond fares and freight as its only revenue streams and to leverage data monetisation and non-fare revenue in a structured manner.
Keynote address, Mr Shishir Priyadarshi, president of Chintan Research Foundation, situated the debate within India’s broader economic transition. “In the last three decades, we have moved from a state-controlled economy to a market-led growth model guided by one of the most important principles—that the government’s role is to govern and not run business,” he said. This shift, he argued, is about recalibrating the relationship between the state, the market and the citizen.
“Railways is not only the artery of our connectivity; on one side it is our emblem of public purpose, but it is also absolutely intertwined with enterprise,” he observed. Stressing its ubiquitous impact, he added, “There is practically no person in India not affected by the railways, no economic sector untouched by it. Railway stands at a crossroads—it needs to maintain its social mission while enhancing its operational efficiency.”
Chairing the proceedings, Mr M. Jamshed framed the core policy dilemma as a choice between private-sector participation and outright privatisation. “This is a business being run and managed by the Government of India. In other transport modes, such as civil aviation, PPP is much easier to implement. Railways, however, carry a dual responsibility: to undertake operations and business development, and at the same time to shoulder a vast public service obligation,” he stated.
Drawing attention to the financial stress in the system, he noted that around ₹60,000 crore of passenger losses are effectively cross subsidised through freight revenues each year, contributing to an operating ratio that hovers near or above 98%. This, he warned, leaves little room for sustained investment in modernisation and expansion. Any move towards privatisation, he emphasised, must therefore be anchored in robust regulatory institutions and clear public safeguards rather than narrow fiscal considerations.
The first session, “Views from Within: Railway Transport Business and its Myriad Challenges – Business, Sustainability and Policy Imperatives of a Strategic Sector, and the Possibilities of its Privatisation/Corporatisation”, brought together former railway officials and sector experts. Panellists underscored that while core track infrastructure would remain primarily state-owned, a wide range of services—such as housekeeping and catering—already involve private entities, demonstrating that calibrated partnerships are feasible without diluting public control.
Speakers highlighted that, during the COVID-19 pandemic, migrant and oxygen trains demonstrated why government stewardship of railways remains indispensable for welfare and crisis response. They also underlined India’s emergence as the third-largest exporter of railway products, suggesting that domestic reforms can dovetail with manufacturing and export opportunities.
A recurring theme in Session 1 was the weakness of contract management in the rail ecosystem. One speaker pointed out that there can be as many as 84 distinct risk elements in a typical railway contract, with inadequate risk-sharing between public and private partners. Studies show significant scope for cost savings through better risk allocation. The panel stressed the need for stronger regulatory mechanisms for fair pricing, safety, and dispute resolution, warning that poorly designed privatisation could derail necessary regulatory reforms and undermine inclusivity.
Concerns were also raised about the risk of exclusion if profit-maximising private operators dominate key segments without adequate safeguards for low-income passengers and essential goods. The panellists urged a mindset shift that treats regulation, public safeguards, and oversight capacity as preconditions—not afterthoughts—to any privatisation or corporatisation agenda.
The second session, “Stakeholders’ Perspective: Growing Role of FBOs, Joint Ventures, PPPs and the Private Sector in Rail Transportation Business and Infrastructure – Prospects”, brought in perspectives from logistics operators, infrastructure companies and policy practitioners.
Participants argued that while government involvement is indispensable for inclusive growth, national integration, cultural conservation and equitable tourism, private capital and innovation are critical for expanding capacity and improving service quality. Rail-linked tourism and heritage conservation were cited as areas where the state must remain actively engaged, with one speaker remarking that “government has all the more business to be in the tourism business connected through rails” to safeguard public goods and cultural assets.
The Container Corporation of India (CONCOR) was cited as a leading example of effective synergy between public ownership and private sector–style efficiency. Panellists argued that dedicated freight corridors, certain routes, and specific logistics pathways offer clear opportunities for private participation, provided risk-sharing, accountability, and competition frameworks are well designed.
At the same time, the discussion acknowledged that FDI inflows into the railway sector have not materialised at the scale envisaged, despite overarching frameworks like the PM Gati Shakti National Master Plan, the National Rail Plan, and the National Logistics Policy. Panellists attributed this to gaps in digitisation, institutional support, pricing and taxation structures, and to the fact that schemes such as the General-Purpose Wagon Investment Scheme (GPWIS) and the Liberalised Special Freight Train Operator (LSFTO) have not fully realised their potential.
International experience—especially the United Kingdom’s experiment with rail privatisation, which saw initial successes followed by challenges related to pensions and service obligations—was cited as a cautionary case. Speakers stressed that India must avoid both the extremes of unchecked privatisation and rigid state monopoly and instead work towards a balanced PPP model that keeps public interest at its core.
The conclave saw robust participation from key stakeholders, including representatives from the Ministry of Railways, NITI Aayog, DFCCIL, CONCOR, and private-sector leaders from the Adani Group, JSW Ports, and other logistics and infrastructure firms.
Summing up the day’s deliberations, the broad consensus was that privatisation and corporatisation are not ends in themselves, but potential pathways to make Indian Railways financially sustainable, technologically modern, and more responsive to users’ needs. A carefully sequenced approach—retaining strategic control with the state, while liberalising commercial operations and crowding in private efficiency and investment—was seen as the most viable way forward.
As one participant put it, the real challenge is to ensure that the government increasingly acts as an enabler rather than an entrepreneur, while remaining firmly accountable for equity, safety, and national integration. In doing so, Indian Railways can continue to serve as both an emblem of public purpose and a dynamic engine of enterprise in India’s journey towards Viksit Bharat 2047.
