Indian Railways at the Crossroads
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Case Code: ECON005 Case Length: 04 Pages Period: 1994 - 2002 Pub Date: 2004 Teaching Note: Available |
Price: Rs.200 Organization : - Industry : - Countries : India, Canada Themes: Economics, Politics and Business Enviornment |
Abstract Case Intro 1 Case Intro 2 Excerpts
"Indian Railways is one of the most studied institutions on the planet. For almost every conceivable question that can be asked, there already exists a comprehensive and vigorous report that lays out the facts and indicates the answers. What is striking, however, is that there has been little action on the many reports that IR has commissioned, both internal and external."
-The Indian Railways Report: 2001.
Introduction
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.
IR operated as a department under the central government of India, headed by a minister of a Cabinet rank. Such was the significance of IR in India, that it was the only department that presented a budget to the Indian Parliament, separate from the annual general budget. 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. By the early-2000s, IR had realized the need to keep up with the changing socio-economic scenario in India and had begun implementing a number of schemes designed to improve operations....
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