ON Saturday, Pakistan Railways announced an increase in passenger fares and freight charges of between 10 and 20 per cent. The same day, the Planning Commission in a new report recommended an initial partial privatisation of the Railways. The problem is straightforward: Pakistan Railways is sinking. Mismanagement, underinvestment, overstaffing and a fare and route structure that is politicised and inefficient mean the entity is on the verge of collapse. Of course, the problem goes far beyond Pakistan Railways. In 2009-10, losses at Pepco, PIA, Railways, Pakistan Steel, NHA, Passco, TCP and Utility Stores added Rs245bn to the federal budget. Given the deteriorating fiscal situation, losses on this scale are simply unsustainable.

So what is to be done? Privatisation has many supporters, especially among economists and experts, but there are certain other realities to consider. Pakistan Railways alone employs 90,000, which makes it a grossly overstaffed organisation. But with inflation soaring, the economic slowdown widening and deepening and a weak government looking ahead towards the next election, lay-offs will be politically difficult. So trimming the fat from public-sector enterprises as a first step towards privatisation is unlikely. One of the ideas that is being pushed is restructuring the boards of public-sector enterprises to bring in professional and competent managers. But without revamping the powers of the boards and senior management, new faces are unlikely to make a fundamental difference. Meanwhile, jacking up fares, such as the Railways has resorted to doing, will not necessarily bridge the revenue-expenditure gap: one of the major problems facing the Railways is that passengers routinely avoid paying fares.

There are some out-of-the-box solutions available, however. PIA is an airline with massive debt and losses that show no sign of abating. Perhaps the 'bad' assets could be parked in a separate account and some other international airline could be invited to run the feasible/profitable parts of PIA on behalf of the owners, i.e. the Pakistan government. By tapping international expertise, the viable portions of PIA's business may at least be salvaged. Other innovative ideas could help rescue the other public-sector enterprises. At this point, so dire is the situation that even the more unusual of ideas should be given consideration. Imagine what even half of Rs245bn could do to improve the living standards of millions of Pakistanis.