Indian Railways at the Crossroads

Indian Railways (IR) was the largest railway network under a single management in the world. IR was often called the 'lifeline of India', because it provided a source of livelihood to a large number of people and brought long-distance travel within the reach of the average Indian. IR was also the largest employer in the world, directly employing about 1.6 million people (as in 2003). In addition to this, it was estimated that it provided indirect employment to over seven million people. One survey in the early-2000s revealed that one in every ten Indians depended on IR, for his livelihood, directly or indirectly. IR carried, on an average, 13 million people across the country everyday.

However, by the late-1990s, IR was at the crossroads. An inability to reconcile its social and economic objectives, a growing number of accidents and the burgeoning importance of airlines and roadways that ate into its market share, burdened the operations of IR and caused a decline in revenues. Analysts felt that it was time for a system-wide overhaul of the faltering organization, which had experienced relatively little change from the time it came into existence in the late-19th century. It was felt that privatization, partial or complete, would be the best solution to IR's problems. However, privatization had some inherent difficulties which made it an unviable option for a government department of the size of IR.