This point had become a serious bone of contention between the railways and the Planning Commission before the freight corridor project was given the go-ahead. The Planning Commission was in favour of setting up a company which would be independent of the railways and would also manage the train operations. "Laloo had put his foot down, adamant that train operations would remain with the railways," says an official close to the minister.

It was only after the matter was resolved that a special purpose vehicle was launched to garner funds from private players for the project, and Prime Minister Manmohan Singh laid the foundation stone of the freight corridor at Mumbai and Ludhiana. The experiment to allow private participation to increase connectivity with ports has also been a success with Pipavav Rail Corporation, started two years ago, and now showing profits. A 282 km-long track had been laid between Pipavav and Surendranagar with private funds. Now more such corporations have been formed including, the Kutch Rail Corporation to build a railway line between Gandhidam and Palanpur. Others are working to build a line between Haridaspur and Paradip in Orissa and a line to connect Krishnapatnam port in Andhra Pradesh.

In fact, Korean steel giant POSCO has shown interest in building the Haridaspur-Paradip line, seeking to pick up a 10 per cent equity in the Rs 560-crore project being undertaken by Rail Vikas Nigam. An official says that private participation in building tracks to run passenger trains is also not ruled out."Like in the case of highways, a private player can build the line and even maintain it. However, he cannot collect revenues like toll tax in case of highways. Here, he will be paid annuity by the railways or paid according to the usage and traffic by the railways," explains an official in charge of public-private participation.

Another area where the railways are keen to get private investment is modernisation of railway stations. While a concrete policy is being finalised, sources say that they intend encouraging setting up of food plazas and hotels through public-private partnership where the railways can provide the land for the purpose.

Deluged with complaints about the poor quality of food on railway stations and trains, Laloo also plans to outsource the catering business completely. The Indian Railway Catering and Tourism Corporation had been set up five years ago to privatise the catering business. However, it had only been done partially. Laloo now intends to outsource the catering completely.