Chugging along!

Written by Mashal Usman • August 2010

The first train in South Asia huffed and puffed its way from Bombay to Thane on April 16, 1853, covering a distance of 34 kilometers and bringing a revolution in transportation in India which would over time boast of a railway network of more than 60,000 kilometers. Gradually, private Indian investors joined the British government in an effort to build India's rail network and today IR boasts a fleet of 7,800 locomotives, 40,000 coaches and 3,26,000 wagons. In addition, nine pairs of Rajdhani and 13 pairs of Shatabdi Express Trains run on the rail tracks all over India. Carrying 15 million Indians daily, the railway has become an intrinsic aspect of life of the common Indian and the quintessence of Indian culture.

Indian Railways was beleaguered with a number of problems throughout the 90s, resulting in poor financial performance. In addition, low resources and investment in the sector as well as a high number of accidents every year (in 2001 there were 344 derailments) brought the organization to the brink of financial disaster. The railways network was meant to serve the dual role of a commercial enterprise and a public service organization but increasing competition and escalating demand from freight and passenger traffic has caused a mounting imbalance between these two roles. The company's performance has improved considerably since 2004 with profits reaching $2.5 billion between 2005 and 2006 but this success is marred by simultaneous alteration in the organization from being oriented primarily to public service rather than a profit making commercial enterprise.

In addition to being the fourth largest railway network in the world, IR also owns the longest named station in the world (Sri Venkatanarasimharajuvariapeta, located in Tamil Nadu). With a staff of 1.6 million and an annual contribution of about 1% to the country's GDP, IR holds great importance for the Indian economy and requires a capital investment of around Rs. 55000 crores. An average growth of 4.5% of the Indian economy underpins the burgeoning demands being placed on IR due to the widening gap between demand for and supply of transport. Over the past two decades the decrease in internal sources of investment has led IR to finance itself from external borrowing which has led to greater interest debt, another problem for IR.

The Indian Railways is in need of a number of immediate reforms including greater flexibility in pricing, increased accountability in spending in the various departments as well as the urgent need to control the rising employee cost and decreasing staff productivity in the organization. In addition, it is essential that the overaged assets be replaced and all outdated technology be renewed, particularly since much of the railway tracks were laid by the British. Most importantly, it is essential to end the "politicization of the decision-making process" and allow it to be conducted on the basis of commercial reasons and not political expediency. There is also a need to install a managerial leadership that can respond swiftly to the constantly changing market conditions.

In spite of its many shortcomings, the Indian Railways has transported many generations of Indians between its bustling stations and can be relied upon to continue to do so for many more generations to come.