Indian Railway, where are we going!

These weekend, I had a discussion with few of my friends, who were students of business, and they were quite mesmerized by the turn around of Indian Railways. Being a son of a railway employee, I was quite interested in anything related to railways.

Well it turned out to be quite a real life enactment of the movie Guru. One could only wonder of how one small step could turn into such a giant change in the Indian economy. This post is my view of what Lalu as a minister did to catalyse this change.
Since the independence, majority of the nationalised institutions have been used by the government to increase their vote bank. Starting from rationing the fuel, reservations in the jobs, production in factories, and even railways. Every year, the railway minister used to discontinue few trains, and start a few others, extend some networks, and prune it from somewhere else. Though the reasons given were administrative efficiency, and maintainability, most of the time it were populist decisions based on regionalism.

When Lalu prasad yadav, joined the cabinet of the congress government, it was assumed by the media, that railway is going bihar way. But one good decision by Lalu, to allow the chairman of Indian Railway make decisions, and suggest some administrative changes, turned out to be blessing in disguise.

The first change came in the budget. Every year, the fares have been increasing, without major upgrades in the facilities for the passengers. Even the safety and security have been overlooked many a times. The first budget was viewed in this context of being populist. But the railway introduced some major changes in ticketing policy.

The on-the-spot ticketing system also known as tatkal, where a passenger has to pay a premium to get a confirmed seat on the last moment, was expanded to most of the trains. Also the maximum seats available in a train was increased. This turned out to be a welcome step, as passenger were already paying premium (read as bribe) to the hooligans, who occupied the seat by force, and then illegally sold them off. Now those money could be diverted to the railways, which would then be utilised in upgrading the infrastructure.

The second major change was the introduction of private partnership. Even though steering away from the privatisation of railways, the Railway board, started to contract off certain, tasks such as maintenance of stations, parking facilities at station based on long term lease contract. The biggest advantage of this was the introduction of job insecurity. Being a government employee, kind of insures your job in India, but working for a private contractor, each and every employee and their deeds were accounted for. This reduced the loss of manpower, and efficiency of the team increased manifold.

The third major change was leasing out the unused railway properties for further development. Historically, railways had owned quite a handsome amount of property everywhere in India. The first good use of this property was introduced in Mumbai, in last decade, when it was leased to farmers, who could set up small farms producing vegetables in kitchen garden size farms. These scheme was rolled out to major cities, and towns. Though the financial gain was minimal, but the unemployed entrepreneurs got some food for thought.

The next was commercialising the railway property. Historically, all the stations had a small lodging facility inside the station building, which was mostly unused as no one actually knew about it. The trial of creating shopping mall sort of facilities has been sanctioned at few stations this year. This would make the station more lively, and would roll in more revenues for the railways.
The railways has proposed a dedicated freight network, which would include special tracks which would be only used by freight trains, and the later would be able to avoid the passenger traffic, and hence would reduce the time of delivery. This means more freight contracts resulting in more money.

Even though Lalu has not attended a business school, or been to Harvard or Cambridge, he just let loose his imagination, and thought of some wonderful revenue generating ideas. Like the movie Guru, a simple man, who is being always considered as illiterate and idiot, one who is always mocked up by the media, has just achieved something that many could not even dream of.

By the way those of you who don't know, Lalu yadav, is a Law gradate from Patna University, and did pass his exams before he was sworn in as a CM, so should be genuine!