Driving a turnaround

It’s difficult to even imagine, leave alone believe, that the Indian Railways, a Rs 54,700 crore giant, lumbering since 1996, has turned around over the past two years.

It’s difficult to even imagine, leave alone believe, that the Indian Railways, a Rs 54,700 crore giant, lumbering since 1996, has turned around over the past two years. What turnaround? The stations suck, the trains stink and let’s not even begin to talk about service. Yes, it’s difficult to visualise this turnaround. But if that’s difficult, let me increase the degree of difficulty — the turnaround has been, and is being, driven by Lalu Prasad, the man accused of driving Bihar aground, single-handedly.

Writing this story has been a challenging task. All sorts of biases, based on subjective inference of the public face of a rustic leader, creep in. The only option we had, therefore, was to look through perceptions and stick to facts — arguably a good starting point. But after we got the facts, we questioned them, put them through a rigorous crunching exercise, analysed them, placed them in perspective. It might sound defeatist had it not been inspiring (as all turnaround stories are), but here’s the story in four bullets:

• The turnaround of the Railways is real, touchable and backed by record-breaking figures. It has been a journey in which the first station was freight earnings — which is what we have largely captured in this edition of Express Survey. The next stop will focus on turning passenger losses into earnings and make a rail journey a pleasant experience. The last station of this turnaround trip is approaching fast—allowing private players to run container traffic and the Rs 65,000 crore freight corridor that will come up over the next six or seven years. It is then that this turnaround will climax.

• The turnaround is deeper than petty restructuring. This is not merely a strategic jump in productivity of all resources of the Railways — men, locomotives, wagons, coaches, tracks, systems, finance — but a thought-through business plan that takes new realities of transport management, like competition from roads and air or changing consumer preferences, into account.

• The turnaround has happened without any increase in fares or freight rates. It is based on a simple fact that expenses of the Railways are indifferent to its throughput (the number of passengers or the million tonnes of freight it carries): the same resources carrying more throughput, resulting in greater efficiency and sky-high profits. Volumes, not margins, are fuelling it. A monopoly behaving like an entrepreneur; a price-setter not raising prices.

• The turnaround has been led by — and my fingers don’t pause on the keyboard when I write the word — Lalu. Just as M. Damodaran took the credit of driving the turnaround in UTI and Arvind Pande for the turnaround in SAIL, it is Lalu who’s driving the turnaround engine at the Railways. But, like other managers, he too has a team, a large one at that — the 1.42 million strong army of board members, directors, managers, drivers, station masters, gangmen, keymen and other ‘invisibles’ — all of who have helped morph the spirit of the Railways. And who are simultaneously assets as well as liabilities.

During the course of this survey, we met a cross-section of people — railway men and those retired from it, of course, but equally, suppliers, customers, competitors, potential partners, passengers, academics. We studied the railway networks of other countries and found that Indian Railways, despite the commendable performance, has a long way to go — the wagon utilisation in the US is three times more than in India; in China it is more than double. We researched competing sectors of roads and airlines and found that market share of the Railways in the past five decades has fallen from 90 per cent to 25 per cent in case of freight, and from 75 per cent to 18 per cent for passengers. Going forward, airlines are looking at gobbling up the creamy layer of the Railways’ passengers. Is the Railways ready?

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Celebration and challenge going hand in hand. Ripe material for launching Express Survey, which tracks major developments in the economy and picks out the most impact-making events, gets under them, decodes them and presents them to discerning readers in a style that’s grounded in hard analysis and is a breezy read. Express Survey is a special section meant for readers searching not only for information, but looking beyond it for insights.

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