Oppose the Privatisation of Indian Railways!

Submitted by cgpiadmin on Fri, 27/01/2017 - 20:58

There has been a lot of talk in the last couple of years that the Government of India is going to privatize the railways. Shortly after the Modi government took power, it appointed the Bibek Debroy Committee in September 2014 to give recommendations on “improving the finances and functioning” of the Indian Railways. The committee gave its report in June 2015. It recommended the corporatization of the railways; it also recommended that the Ministry of Railways should only be involved in policy making and that private players should be allowed to run passenger and freight operations.

Brothers and Sisters,

Faced with the unanimous rejection of these proposals by the railway workers and their unions, and the threat to go on strike, the Rail Minister was quick to backtrack and said that “Railways will continue to be owned by the Government of India, managed by the Government of India. We want change not for the change in ownership … we want to bring in private capital or technology to improve the functioning of railways, so that railways become more valuable.”

Before this in Dec 25, 2014, the PM addressed workers at Diesel Loco Works, Varanasi and said he wanted to make clear to all Indian Railway workers and the Indian people that the railways would never be privatised, and not to believe the rumours being spread. However, these double-tongued politicians are hiding the fact that the government is actually handing out the ownership of the Indian Railways piece by piece to private capitalists.

Let us look at the actual facts. :

1. In the last two Railway Budgets presented by the Railway Minister, Mr. Suresh Prabhu, in February 2015 and 2016, he had announced that Rs. 8.5 lakh crores would be raised over 5 years to augment the capacity of Indian Railways and to modernize infrastructure. This would be raised from LIC & World Bank and by handing over 400 select railway stations all over India to private companies for redevelopment and selling other railway assets. Money would thus be raised both through private sector participation as well as Foreign Direct Investment (FDI). This plan of the BJP government is in line with the policies of both the previous Congress governments of increasing reliance on private capital to fund infrastructure in roads, power, and telecom and now in railways.

2. On October 24th 2015, the Rail Minister addressed a meeting in Singapore, organized by the Singapore Government and the World Bank. Here he declared “Private players can participate in upgradation and horizontal expansion of stations including construction of malls, laying new tracks, creating separate freight and passenger corridors to reduce congestion, etc. by adopting equity route and work with Indian companies on zero risk basis with assured financial returns”. This means that he is guaranteeing Indian and Foreign capitalists of assured profits with zero risk for investment in the Indian Railways. This is music to the ears of every capitalist, whether Indian or Foreign.

3. The railways signed an MOU with LIC in March 2015 for a loan of Rs. 1.5 lakh crores over the next five years to fund additional rail capacity. However the condition for these loans laid down by LIC is that they will only be used for financially viable projects which will ensure an annual rate of return of at least 14% every year!

In order to increase its capacity the railways could build new railway tracks in places where there is no rail connectivity. However in this case, the returns would be low. Since the Railway Minster as well as lending agencies want “maximum returns with a minimum of investment” it is clear that they will choose instead to “decongest”. This means that they will build additional tracks alongside already existing tracks which are congested by heavy traffic, which would ensure high returns. This is a typical profit centric method of investment which is totally in conflict with the needs of the Indian people. The Railways have identified 24 routes where additional tracks would be laid to “decongest” the existing routes. The identified corridors include the Golden Quadrilateral - Howrah Chennai, Delhi Howrah, Howrah Mumbai, Delhi Chennai, Chennai Mumbai and Mumbai Delhi. This means that the entire LIC loan will be utilised for laying new tracks along existing railway lines and not for creating new rail lines.

During the visit of the Japanese Prime Minster, Mr. Abe to India in late December, 2015, the details of the Indian Railways’ plans to introduce a “Bullet” train from Mumbai to Ahmedabad at a cost of nearly Rs. 1 lakh crores was announced. This fancy project also includes a 21 km undersea ride between Thane and Virar! Japan has offered to fund 80% of the cost of the project with a 50 year loan at 0.1% interest, with moratorium of 15 years fro repayment. However since the major part of the funding of this project is to come from Japan, they will dictate the terms and the majority of rolling stock and signal equipment is expected to come from Japan, making a mockery of the Government’s Make in India efforts. Also since Japan is the sole monopoly bidder as well as financier for the project, India will have no control on the rates that the Japanese will be charging for their equipment, which it is expected will more than cover the so called low interest rate they are offering.

The railways expect the bullet train project to be running in seven years. However what is being hidden is that this bullet train will operate only for the rich, with a one way fare between Mumbai and Ahmedabad of around Rs. 3,000, which is comparable to air travel. The maximum number of people who are expected to use this service is around 50,000 people per day, whereas the Indian Railways carries 25 million people per day. Hence only 0.2% of the travelling public will be using this bullet train. The question which the Railway Minister refuses to answer is why is so much money being spent on a service which will cater to 0.2% of the travelling public. It costs Rs. 10 crores to build a kilometre of new railway line for normal trains. With Rs. 1 Lakh crores, 10,000 km of new tracks could have been laid to develop our hinterland and decongest the already crowded existing routes instead of the 500 km for the bullet train between Mumbai and Ahmedabad, which works out to Rs. 200 crores per km.

The millions of travelling people desire better services, increased capacities, increased safety and a more humane way of travelling. It is to address these concerns that the railway minister should be putting his energies.

The Railway Minister is actively thinking of how to encourage private trains running on the railway tracks, reducing the Indian Railways’ own operations.He said “Eventually we have to get more private sector in the operations of the railways. Today, we are not able to get them because there is so much of congestion. If we create this capacity and availability, then private sector can come in and also give us a lot of money eventually without making any investment. We will own the network, they will operate the trains. We can make money out of it.” Again it is not difficult to understand that the private capitalists will operate the profitable sections of the railways, such as carrying goods and catering to the needs of the rich by providing bullet trains, etc., while the Indian Railways will be left to run the loss making part, namely the carrying of millions of working people at subsidized rates and in inhuman conditions. This is the direction in which the railway minister and the government wants to take the railways.

Brothers and Sisters,

We have to oppose the privatisation of the Railways because

i) They want to hand over the vast infrastructure, land and labour that are represented by the Indian Railways at cheap prices to the capitalists. This is the real aim of all privatisations, though the claim is that doing so will make it more efficient. The process of privatisation has been pursued by all the parties that have been in power for several decades. The Indian Railways was built out of our savings, out of the savings of the Indian people. It belongs to us and we will not allow this.

ii) We cannot allow a profit centric approach in running the Indian Railways.When the British left India, there were 54000 km of railway routes. Now after 69 years of Independence, the route length has only increased by 11,000 km to 65000 km, while the track length has increased to 115,000 km mainly by doubling and trebling tracks on existing routes. Hence vast regions of our country remain unconnected by rail. It is a known fact that a railway line acts as a catalyst to growth in any region. This also means that successive governments have not built much additional route capacity and have not worked to develop all our different states and regions in a uniform manner. This has created huge imbalances, with many regions and states being underdeveloped and people from these states having to leave their homes and hearths and migrate to far away places in search of a livelihood. Handing over the railways to private capitalists will only aggravate this problem as they will not be interested in putting the necessary new lines which require huge capital, but will try to milk the existing old lines as much as possible which would have been handed over to them at cheap rates.

iii) The government’s offer to private capitalists to run privatisation projects on the PPP model is nothing but giving a guarantee to them of an assured rate of return (profit) on their investment. This means that the public (i.e. government) private (i.e. the capitalist) partnership will be assured a high rate of profit on whatever money the capitalists put into the enterprise. This is highly beneficial to them since on their own investment, they are not assured of a fixed rate of profit due to competition as well as market swings and uncertainties. The “assured rate” will either come from the travelling public who will have to bear increased costs, or else from the government’s coffers which indirectly again means that the working people have to pay through higher taxes, etc.

iv) In support of its recommendations for privatisation, the Debroy Committee has cited the examples of privatisation of English, German, and Japanese railway systems. There is no doubt that privatisation has immensely benefitted the capitalists of those countries. However, the Committee is hiding the fact that privatisation has been at the cost of the railway workers and people in those countries, and has been opposed by them. The monthly season tickets in Britain are 10 times that of France where the rail system is run by the government. An opinion poll recently conducted in Britain showed that 75% of the people wanted renationalisation of British Rail!

v)Moreover there is an acute need for expanding the rail network in India so that it caters to far-flung areas that may not be profitable. A large amount of capital is required to lay this new network. The capitalists of course never cater to the needs of the people.

Brothers and Sisters,

The conditions in which people of our country have to travel, as well as the condition of the workers of Indian Railways are among the worst in the world, both in terms of safety as well as comfort. No one can deny that the Indian Railways require to be developed. However, the direction should be in the interest of all the people of India, those living in far flung places as well as cities, passengers as well as those who work in the Indian Railways. The direction in which the successive governments are moving is exactly the opposite.

The Modi government’s moves to accelerate the privatisation of Indian Railways are accompanied by further attacks on the Indian people, such as amending the labour laws to allow easy hire and fire, privatisation of banks, insurance and pension funds (which is nothing but handing over the accumulated savings of the Indian people to the capitalists), amending the land acquisition laws to allow for easier grabbing of peasants’ land as well as urban land, and a host of other measures being pushed under the slogans of ease of doing business and “Make in India”. Just like the previous governments, this one too does everything in its power to serve the big capitalists, Indian as well as foreign.

The working class has the duty to oppose these anti-people and anti-social plans. We have at the same time the duty to put forward to all the working and oppressed people of India an alternate plan and program for the development of our country. This plan and program will have the aim of fulfilling the needs of the working people of India and not that of a tiny minority of exploiters.

Tag:    Jan 1-15 2017    Political-Economy    2017   

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