The noises started sometime last year, when for the first time in decades, nay, for the first time ever, people started to talk of the Indian Railways actually making profits. This behemoth of an organization, the mother of all government institutions, the much derided, but still much used, the Grand old Indian Railways was on a turnaround!
And the person who brought it about? Why, its Lalu Prasad Yadav. I still don't know when he went to Lalu from Laloo, but thats not the point of the story. Everyone's hated Lalu, and for good reason. The man brought an entire state to ruins. He and his posse of relatives and party workers plundered the land of the Buddha and turned it into a destitute, a playground for criminals and laughed at by the rest of the country.
Hmm, come to think of it, very similar to the Railways: dirty, late, unsafe, yet the only option available. Filthy railway stations and old smelly bogeys are the images that come up when one mentions Indian Railways.
So when he lost Bihar after 15 years, it was a big deal. I was only left wondering why the hell did it take those people 15 years to vote him and his wifey out. Anyways, Lalu now owns the Railways ministry at the Centre, entirely in thanks to his group of RJD MP's who form the part of the UPA, an illustrious line-up of substandard politicians. Let me add that the good ones actually take a lot of slack away from the non-performers.
The ministers who did good are the PM himself, Chidambaram, Praful Patel, Mr. Maran, and now Lalu Prasad Yadav. So how HAS the railways been fairing? Well, while most of it is still grimy and dirty, it seems it is doing pretty good financially. Remember one time when he locked the doors to the Rail Bhawan and sent all the late comers back home? Everyone thought it to be one of Lalu's arrows from his eccentricity quiver, but maybe he did start to get things done.
Unlike other rail ministers, who flogged freight to compensate for passenger fare, Lalu has actually lowered them, offered incentives, like lower rates at off-peak hours, introduced facilities, and has actually stated that he aims to change the face of our railway stations! There was news recently that he travelled somewhere once, I think to Bihar, and he said it was a nightmare. Dirty toilets seemed to upset him in particular. Well good for you Lalu ji, sharing the pains of millions of other passengers.
Let me try to pull together some news to see whats going on. Oh, before I forget, I felt that this year's rail budget created a lot more buzz in the economic and media circles, for the simple fact that it was good (!).
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. 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.
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 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.
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Maverick engineers Indian Railways turnaround
Indian Railways now has $2.48 billion in fund balances, from $78 million in 2001, a stunning reversal after being long seen as a terminal debt trap. With new budgetary announcements of passenger-friendly and growth-aimed projects, the once-doddering behemoth is now dancing sprightly to attract big chunks of the $150 billion in foreign investment that financial experts expect India to attract in the next five years.
Railway container services will be privatized from April 1, a move welcomed by industrial associations. Licenses to operate container trains would have 20-year validity with the option of a 10-year extension.
With petroleum prices increasing, Yadav did not increase fares but slashed them, reducing air-conditioned upper-class categories from 18% to 10 %, a move also forced by budget airlines eating into the railways' higher-end customer base.
Yadav said in his budget speech in February that he would encourage public partnerships and public-private partnership schemes. They include opening food plazas and bank machines at the important stations across the 63,000-plus-kilometer rail route, and a new timetable.
Other major infrastructure projects await investors, such as the Dedicated Rail Freight Corridor (including a proposal to construct a $4.962 billion "dedicated multi-modal high-axle-load freight corridor", with computerized control), along the western and eastern networks.
The year 2006, Indian Railways has declared, will be the year of "Passenger Service with a Smile", a sentiment its money managers might heartily endorse as they laugh their way to the bank, instead of being laughed at.
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Giving an IT boost to Indian Railways
Railways to set up budget hotels
Indian railways get double decker train
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