Indian Railways (IR), which was declared to be heading towards bankruptcy as per the Expert Group on Indian Railways in 2001, is today the second largest profit making Public Sector Undertaking after ONGC. The fund balance crossed Rs.12,000 crores in 2005-06, which had reached a low of just Rs.149 crores in 1990-2000. The total investment being planning for the eight-year time frame (2007-2015) is tentatively in the order of Rs.350,000 crores. This confidence is not only due to the rising trend of performance, but also due to the significant growth in the past two years. These two years coincided with Mr. Lalu Prasad being at the helm of affairs of the IR, having moved into his position on 23rd May, 2004. Railway officials called this as the ‘turnaround’ of IR. This paper attempts a diagnosis of the ‘turnaround,’ beginning with the question as to whether it really was a ‘turnaround’. This paper then carried out an analysis of the various determinants of the ‘turnaround’ related to goods, passenger and other operations. This is followed by a critical assessment of the strategies and key processes being the ‘turnaround’. Finally the sustainability of the ‘turnaround’ is explored.
Statement of Problem
The Indian Railways in 1990 had major financial difficulties which hampered its growth and there were apprehensions on its capability to make available a viable transport service in future. According to experts the main reason for this was the practice of considering railways as an indispensable public service and to the tariff administration .another critical reason for the decline in growth and the financial crisis was the loss of passenger traffic to roads.
IR draws up its development plans within the framework of National Five Year Plans. Investment in the transport sector, including the railways, was the main concern in the early phase of India’s planned development.
The plan wise... [continues]
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