Indian Railways (IR), the single largest employer in the world, has been performing a commendable job socially. But in the process, it has created an economic mess of itself. IR needs to undertake reforms on an urgent basis. This article examines the challenges facing IR and how they can be addressed.
The
Indian Railways (IR), is reportedly the single largest
employer in the entire world with a workforce of 16.5
lakh. It covers 62,800-route km and carries around 13
million passengers daily and is by far the largest
railway system under one management.
IR
plays a crucial role in moving freight and passengers in
the country. It has traditionally focused on serving
important social objectives including providing linkages
to most parts of the country, moving supplies and relief
free of cost during national emergencies, like the
Gujarat earthquake and providing subsidized travel to
the weaker sections of the society. In the process, its
financial position has been systematically weakened. IR
had defaulted on the 7% dividend that it pays to the
center during the last three years. The operating ratio
has been dangerously close to 100 during the past many
years. This implies that there are hardly any funds left
for replacing assets, expanding infrastructure,
improving passenger amenities or electrification, let
alone dividend payments. Today IR is at the crossroads,
and needs to address its concerns. Unless this is done,
it might be headed for an irreversible decline.
The
challenge ahead for IR is to balance its social and
commercial objectives. As the saying goes, a problem
well-defined is half the problem solved. IR needs to
address a few questions urgently.While
IR has done well on the social front, it does not seem
to be clear about what business it is in. Is it in the
business of transportation by rail or is it in the
business of providing logistics services? IR needs to
position itself as a logistics solutions provider to
become profitable.
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