India needs to drastically restructure, monetise and privatise the railway sector for boosting investment rates. Railways carry only around 7 percent of passenger traffic and passenger numbers are now declining in absolute numbers. It is also losing freight traffic steadily.
Railways should and can see investments in excess of over Rs 5 lakh crore a year for many years but ends up making only about a third of this requirement -- a large part of that is also paper investment. Moreover, railways project and financial management is of extremely poor quality, putting considerable pressure on fiscal resources as well.
Here are some suggestions to put Indian Railways back on the growth track:
Subhash Chandra Garg served as Economic Affairs Secretary and Finance Secretary of India. Garg, a 1983-batch IAS officer, demitted office on October 31, 2019. The former senior bureaucrat, who also served as an Executive Director in the World Bank, had prepared a note that listed major economic, financial and governance policy reforms India needs to adopt to build a $10 trillion economy by early 2030. CNBC-TV18 is publishing a series of articles based on this note. This is the fifth article in the series.
Follow the series here.