PPP model for railways – the viable future option?

By Geeta Saha, Mrinal Vashishtha and Shivam Jatadhari, HSA Advocates
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Indian Railways, state-owned by the Ministry of Railways, has been the backbone of India’s mass public transportation network for decades. The Indian railway network is among the world’s largest and with constantly increasing and countrywide urbanization, it has become imperative for the government to modernize the railway sector. This has opened more areas of investments to private and public sector companies, banks and financial institutions.

The Finance Minister, Smt. Nirmala Sitharaman, in her maiden budget speech in 2019, announced that the public-private partnership model (PPP) will be used to bring about faster development of the railways including rolling stock manufacturing and the delivery of freight.

railway
Geeta Saha
Partner
HSA Advocates

In 2014, the government put forward plans for the largest ever expenditure for the railways of ₹654 billion (US$9.1 billion). It also proposed the introduction of bullet trains on the Mumbai-Ahmedabad network. The government in successive budgets has increased the outlay to ₹1.2 trillion and has introduced superfast trains with onboard services. The government also set up the Indian Railway Stations Development Corporation (IRSDC), a nodal agency whose remit is the redevelopment of stations in India. Under the Adarsh Station Scheme (ASS), Indian Railways has identified 1,253 stations, of which 1,103 have already been redeveloped.

In the 2019 budget, the government allocated more than ₹30 billion for rail passenger amenities. In order to improve the quality of travel and to provide world-class services the government has decided to build modern trains such as Train 18 or Vande Bharat trains and aims to put 109 such trains in service in the near future, replacing the Shatabdi and Rajdhani express trains.

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Geeta Saha is a partner and Mrinal Vashishtha and Shivam Jatadhari are associates at HSA Advocates.

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