Railways asks PSUs to compete with private firms for rail contracts

The Indian Railways Board has released an order that would make public sector firms, involving those under the national transporter, compete with the private sector in the open market for rail agreements.

The order on Tuesday, in effect, takes away a level of protection the PSUs enjoyed under a policy created in 2019, which provided them dibs at juicy rail deals.

The decision taken by Railway Minister Ashwini Kumar targets to cut down on paybacks, attract more competition and therefore drop the Railways' cost. The policy passed by the Board, in their meeting conducted on December 19, 2019, to bring competition amongst the PSUs for granting Railway works, hereby stands cancelled with immediate effect. Under the earlier policy starting in 2019, the railways recognised eligible PSUs and granted the agreement after a competition within them. The successful PSU would then invite bids for contractors for the works.

The Tuesday order said that to further benefit from competitive bidding, it has now been offered to cancel the policy for competition among eligible PSUs for allocation of work by railway board, and the same shall now be done via open bidding with immediate effect.

All such works granted to PSUs under the existing scheme for which LoA (letter of award) has not been released or MoU inked or no major contractual obligation undertaken in any form will also stand withdrawn with immediate effect.

Under the new policy, the zonal railways will invite bids in the market, and the deal would be given to whosoever wins the proposal -- a PSU or any other firm. It cuts out a layer in the process which will save both time and money. It additionally will remove corruption and even the monopoly of certain groups.

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