Ever since it was nationalised in 1951, the colossal network of the Indian Railways (IR) has remained a near-total government monopoly.

It spans over 67,000km, employs a workforce of more than 1.2 million, and ferries around 8.4 billion passengers annually.

Until 2016, it even had a dedicated budget that was presented in Parliament ahead of the national budget.

But in a bid to shore up its finances, the Ministry of Railways on July 1 invited initial bids from private players to operate 151 passenger trains on 109 routes around some of India's key cities.

The new trains will be made operational by April 2023.

The operators will be given licences for 35 years and have to share part of their revenue with IR.

The move is an attempt by the cash-strapped organisation to generate private investment of around 300 billion rupees (S$5.5 billion) and offer better services to passengers who can pay the higher fares expected on these premium trains that will run on IR's lines and use its other infrastructure facilities.

The private operators will be responsible for procuring, operating and maintaining the trains.

IR's plan is also aimed at reducing a supply deficit in its services.

IR officials have said that these 151 private trains will run in addition to the more than 13,500 passenger trains IR runs daily.

In a paper last Tuesday, Indian ratings agency Acuite Ratings and Research Limited (ARRL) said that the move will improve IR's operational efficiency, which has an average operating surplus of only 2 per cent. According to the paper, the partnership with private operators will also help IR allocate more funds to upgrade its ageing infrastructure and encourage new private-sector as well as foreign investment in the railroad segment.

The bid requires a majority of the trains to be made in India and restricts the provision of guards and engine drivers to IR.

Mr Suman Chowdhury, chief analytical officer at ARRL, told The Straits Times that many players will be drawn by the offer.

He said: "It is expected that more routes will be given out if this plan works well. So people will invest not just because of these 109 routes but because it is a beginning and with the hope of more opportunities later on."

But many are also worried about the impact privatisation could have on services used by poor and suburban passengers.

The railways earns an average of just around 44 paise (one Singapore cent) per passenger per kilometre - an indication of how low tickets on non-air-conditioned trains are priced to keep them within the reach of poorer masses.

The low revenue from passengers is compensated by higher earnings from IR's freight services.

Private firms will have a limited margin to charge more for their services than what IR currently does for its higher-end services.

Any such move will put them in direct competition with India's budget airlines which, at times, have offered tickets cheaper than those on air-conditioned trains.

The plan has also prompted criticism for not asking private players to develop the infrastructure required to run these additional trains and letting them instead benefit from a setup that has been developed over the years using taxpayers' money.

Mr Dinesh Trivedi, an opposition leader from the All India Trinamool Congress and a former federal minister of railways, told The Straits Times that the private players under the proposed plan will focus simply on delivering luxury services on a fancy coach.

"The private sector will not invest in tracks, stations, signalling systems. I would have appreciated it if the private sector was first asked to build the infrastructure they are going to use," he said. "That is where investment is really required."

Mr Trivedi likened the revenue that will be generated for IR from this arrangement to a "drop in the ocean of investment" required to improve railway infrastructure.

He emphasised that allowing these additional trains on the overburdened tracks and using IR's signalling systems will also cause operational inefficiencies such as delays.

"This is ultimately going to build two Indias on our tracks - one for the poor and the other for the rich - and further divide the Indian Railways' services," he added.