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A remarkable turnaround

Until three or four years ago, no one would have believed that the Indian Railways could ever join the elite group of financial achievers among the global railway systems. With an anticipated operating ratio of 78.7 per cent — which means spending Rs.78.70 to earn Rs.100 — the Indian Railways have not only achieved a remarkable turnaround in finances, but also demonstrated their operating efficiency. Coming as it does in the global context of subsidies and rising fuel costs, it only shows the capacity of the system to perform if given the right working environment. Whatever the shortcomings, or inadequacies, the Indian Railways can always be expected to perform, even in a crisis or disaster situation. It was the absence of a political will, compounded perhaps by too much of political interference, and the fact that the Railway administration was not given a free hand to run the system professionally that resulted in sustained losses. Subsidies have always been a problem and the Indian Railways have consistently shouldered social burdens. But within that framework, it was always possible to raise the level of performance and efficiency, as has been demonstrated now.

Only once in recent times has the operating ratio caused concern, when the figure touched 94 per cent. This year's tally of 78.7 per cent puts it in the select group of railway systems that have achieved 80 per cent or better. That explains how the Indian Railways notched up a surplus of Rs.20,000 crore in their operations. This has come only after an unceasing and vigorous drive by the top managers at the national and the zonal levels. But the effort needs to be sustained. Railway Minister Lalu Prasad can justifiably claim credit for this remarkable performance, and the invitations he has been getting to address national and international business school audiences testify to the wider recognition of the turnaround. The performance, however, must be based on permanent and sustainable operating structures. Now that an International Railway Strategic Management Institute is taking shape in New Delhi, it may be worthwhile to work on institutionalising functional autonomy in some form for the Indian Railways. The new institute needs also to turn its attention to attracting talent and training good managers for the Indian railways.

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