| Indian Minister of Railways Lalu Prasad Describes Railways’ Dramatic Transformation |
| by Natalia Olynec |
Indian Railways (IR), the world’s largest employer and busiest railway network in the world, transformed from a loss-making organisation on the verge of bankruptcy to one with revenues of US$6 billion in 2007. India’s Minister of Railways Lalu Prasad told a standing-room-only audience at the Lee Kuan Yew School of Public Policy the story of how he engineered this dramatic turnaround with a budget of just $200 million when he took the top post of this national institution in 2004.
The revival of the railway behemoth is now a popular case study in policy and business schools around the world. Prasad rejected advice from the World Bank to increase fares, layoff employees and privatise the core business of the organisation. Instead, he kept the railways’ 1.4 million employees, reduced fares, improved efficiency, and started partnerships with private companies.
“Our vision is to be the number one railway the world over,” Prasad, dressed in a traditional white Indian kurta, told an audience of about 600 people that overflowed into an adjacent hall to watch the lecture on a large screen video. “It is our earning horse.”
 Our vision is to be the number one railway the world over
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Honourable Minister, Lalu Prasad
Minister for Railways, Government of India |
The success of the business is based on increasing volume, he said. IR, which transported 17 million passengers and one million tonnes of freight daily, started using longer trains to carry greater loads. By increasing the capacity of long-distance trains to 2,000 passengers from 800, unit costs fell by 45 percent. The number of days needed to load and unload a train was reduced from seven to five, and procedural changes helped cut down corruption.
Prasad introduced air-conditioning and cushioned seats on the Garib rath, known as the ‘poor man’s chariot’, train which is meant for passengers who cannot afford the more expensive tickets for regular express trains.
The minister also plans to convert run-down stations to world class standards to rival stations in Paris and London, he said. He said he will further modernise IR by introducing Japanese-style bullet train services between major cities.
In a country that relies on agriculture, railways play a vital role, Prasad said. Reducing freight rates allows farmers to access markets for their goods. He suggested opening markets and purchase centres at various stations to help farmers. In an effort to promote water conservation, Prasad proposed using the land connecting the 64,000 kilometers of railway lines to carry pipes with water for drinking and irrigation.
Prasad is also negotiating a loan from Japan for a dedicated freight corridor project that will initially link New Delhi and Mumbai and then expand to other cities. The project is aimed at easing congestion, reducing delivery times and improving efficiency.
The Indian Railway’s transformation necessitated a change in management style in a politically sensitive environment, explained Prasad’s adviser Sudhir Kumar, who introduced the minister and described the management changes at IR.
“The challenge was to serve an omelet of reforms without breaking any eggs whatsoever,” Kumar said.
Kumar advocates nurturing a sense of passion and ownership of strategy and goals among all employees.
“The key is to create early successes and to celebrate those successes,” he said. “Leadership should be passionate. It becomes infectious.”
Leadership should be passionate. It becomes infectious.
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Honourable Minister, Lalu Prasad
Minister for Railways, Government of India |
He said the main change was to approach the railways as a commercial entity rather than as a state monopoly.
“We are not in the business of railways, we are in the business of transportation,“ Kumar said. The only way to succeed is to offer service and value to customers, which is superior to other modes of transport, he said.
For example, to improve efficiency and fill train capacity, IR introduced different rates for peak and non-peak travel. Passengers on waiting lists for cheaper seats can be upgraded to upper class seats if there is space. IR has also introduced Internet booking to reduce long queues at ticket booths. Those without Internet access can buy tickets at post offices or other outlets.
“It is nothing but pure and simple commercial common sense,” he said. “It is the sweet synthesis of commercial savvy and political savvy.”
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