Privatisation of IR is not so easy due to complexity of rly. operations, vastness of its infrastructure and no previous experience of Indian corporate sector in railway operation. I think the best way is to start involving private sector gradually
(1) beginning has been made in a small way by involving pvtsector in non core operations like cleaning etc i.e. contracting. This has to be expanded gradually so that the burden wage burden on IR gradually comes down with passage of time and & at the same time pvt. sector may have more acquaintance with complexities involved in railway operations.
(2)...
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IR may be divided into 2 different companies, first- IR infrastructure LTD which shall own and maintain the track, other infrastructure etc and second-a IR train operations Ltd. which shall operate and market the trains. Pvt cos.may be allowed to operate trains on the IR infrastructure (Permanent way) with level playing field and compete with IR train operations Ltd. All the Operators shall pay mutually agreed to charges to rail infra co. for using the infrastructure.
(3) Finally the Pvt Cos. may be allowed to construct and own railway tracks and allow the train operators to run & market the trains on their track. This will ensure that there are many parallel routes owned by different rail infrastructure companies (one being IR infrastructure LTD) competing with each other.
(4) Many train operators in the field shall be free to use infrastructure of any company(ies) for any train and shall also be competing with each other.
(5) All the prices and rules of the trade shall be regulated by an independent regulator, so that all companies compete with each other with level playing field for all.There will no scope for any inefficiency and consumer shall have many options.
(6) In this structure all the companies involved with railway shall be trying to give best possible facilities at minimum possible costs to attract customers and the problems like non availability of railway reservation etc shall just vanish.
(7) Unlike IR, pvt sector players know very well, how to sense the possibility of traffic and serve them to expand their business. Customers too get the benefited with improved services.