Growth Strategies Case Study

Indian Railways: The Juggernaut Turns Around

OR

Abstract:

Indian Railways (IR), a state-owned railway company, had a near monopoly in the country's rail transport. It was also the second largest with 63,028 route kilometers, 108,706 track kilometers and busiest rail networks in the world. IR was the world's largest commercial utility employer, with more than 1.6 million employees.

A legacy from the British rule, IR had been a socio-economic entity, striving to achieve its justifiable economic existence. With the liberalization of Indian economy since 1991, the policies of the railways became obsolete. To become economically viable in the competitive era, IR faced hurdles like duality of objectives, hazards of safety considering its organisational size and the emergence of competition from other means of transport like airlines, particularly low cost airlines.

In 2001, IR was written off as the burgeoning responsibility for the government. Experts opined that by obliging to political and social agendas, IR failed to utilize its capacity and achieve its profit goals. Amidst criticism, IR stabilized its financial situation in 2002-03.

In 2004, Lalu Prasad Yadav (Lalu), a famous political leader, was given charge of Ministry of Railways, one of the most sought after portfolios in the government owned utilities of India. He proved to be a dark horse, as under his leadership, IR adapted and implemented cost effective strategies to raise the revenues. For the first time the passenger fares and freight rates were not hiked to increase revenues but the, per train load was increased by 4-5 tonnes on selected tracks to yield higher revenue. Such measures combined with a “value for customer” philosophy and considerations of IR as an economic enterprise, were elementary in bringing about Indian Railways’ turnaround. The Railway Budget 2006-07 had great plans for expansion and growth for railways and a landmark Dedicated Freight Corridors.

But the critical question was with the change in political scenario or with the end of tenure of the incumbent government, would IR still be able to sustain its unprecedented performance in the future?

Pedagogical Objectives:

• To understand the dynamics of rail transport industry in India and the monopoly of Indian Railways
• To analyse the conflicting goals of Indian Railways as a public utility organization vs. a self run profitable organisation
• To scrutinize the leadership roles played by various politicians and its impact on the growth and development of Indian Railways
• To debate on the future strategies of Indian Railways

Keywords : Indian Railways (IR); East India Railway Committee; Operations of IR; Social responsibility versus profitability; Bureaucracy; Operational inflexibility; Railway board; Subsidized fares; Growth Strategies Case Study; Social obligation cost; Commercialisation of Indian Railways; IR (Indian Railways); Views on privatization of Indian Railways; Railway finances; Partition of India; Pension liability of Indian Railways; Railway zones

Contents : 
Introduction
Background Note
The Birth of the Indian Railways
Private Railways
Organizational Structure of IR
Organizational Chart of Indian Railways
Rail Budget and Finances
IR at Cross Roads
Engineering the Turnaround