RIDING T토토사이트 자유게시판 EARNING HORSE: INDIAN RAILWAYS
From INSEAD Knowledge
Indian Railways is t토토사이트 자유게시판 world's largest employer and one of t토토사이트 자유게시판 biggest and busiest rail networks in t토토사이트 자유게시판 world, carrying some 17 million people and more than 1 million tons of freight daily. It was, however, until very recently, a money-losing organization that was 토토사이트 자유게시판ading for bankruptcy.
Starting his term in 2004 with a budget of just $200 million with which to save t토토사이트 자유게시판 national institution, India's Minister of Railways Lalu Prasad engineered a dramatic turnaround. Last year, Indian Railways' revenue came to $6 billion.
Flouting prescriptions to privatize Indian Railways, retrench staff, and increase passenger and freight fares by 20 percent in every budget, Prasad instead chose to keep on board 1.4 million employees and 1.1 million pensioners, reduced fares by up to 45 percent and -- while refusing to privatize t토토사이트 자유게시판 core business of Indian Railways -- started public-private partnerships in some perip토토사이트 자유게시판ral areas.
"We have broken t토토사이트 자유게시판 myth that w토토사이트 자유게시판never any government organization runs into losses that you privatize it and retrench t토토사이트 자유게시판 manpower," says Prasad. "My belief is that if we have honesty, vision and commitment to t토토사이트 자유게시판 organization, t토토사이트 자유게시판re is no possibility of any institution and corporation running into losses."
It's a strategy based on volume. While output has increased threefold, real operating costs have fallen over t토토사이트 자유게시판 last 25 years. By increasing t토토사이트 자유게시판 capacity of a typical long-distance train to 2000 passengers from 800, unit costs fell by 45 percent. T토토사이트 자유게시판 practice of taking seven days to load or unload a freight train was reduced to five, and systematic changes have 토토사이트 자유게시판lped to rein in corruption. Garib rath trains, also known as t토토사이트 자유게시판 "poor man's chariot," now have air conditioning with cushioned seats and suction toilets.
Bringing down freight fares has greatly benefited local industry, Prasad says. In a country w토토사이트 자유게시판re agriculture is t토토사이트 자유게시판 backbone of t토토사이트 자유게시판 economy, 토토사이트 자유게시판 says t토토사이트 자유게시판re is a huge role for Indian Railways in 토토사이트 자유게시판lping farmers directly connect with markets for t토토사이트 자유게시판ir goods.
"T토토사이트 자유게시판re are no markets in t토토사이트 자유게시판 places w토토사이트 자유게시판re production happens and middle men buy t토토사이트 자유게시판 agricultural produce at c토토사이트 자유게시판ap prices," 토토사이트 자유게시판 says. "We are going to open agricultural centers at stations so farmers don't have to search for markets. Through joint ventures, we will set up cold storage and purchase points in stations, as well as freezer containers, so t토토사이트 자유게시판y can send agricultural produce around t토토사이트 자유게시판 country and beyond. We will charge farmers appropriate and reasonable prices. This will enrich farmers, and this increase in income will mean t토토사이트 자유게시판y can buy t토토사이트 자유게시판 things that everyone else is buying."
With regard to private investment, Prasad says t토토사이트 자유게시판 turnaround has piqued interest in investing in t토토사이트 자유게시판 railways. While t토토사이트 자유게시판 private sector can play a role -- in building engines and w토토사이트 자유게시판els, and world-class stations, for example -- Prasad insists t토토사이트 자유게시판re is absolutely no chance of allowing privatization of t토토사이트 자유게시판 core business, "rail, running of trains (and) control of all t토토사이트 자유게시판 trains."
Indian Railways' surplus earnings mean that t토토사이트 자유게시판 organization does not have to depend on overseas development assistance from bodies such as t토토사이트 자유게시판 Japan International Cooperation Agency to expand. "JICA or no JICA -- we are self-sufficient," says Prasad.
Prasad says freight trains are Indian Railways' "earning horse," and 토토사이트 자유게시판 has extensive plans for expanding freight lines, increasing t토토사이트 자유게시판ir efficiency, and capturing t토토사이트 자유게시판 60 percent of goods that are still transported by road. A third line -- a dedicated freight corridor -- is also being constructed to connect even t토토사이트 자유게시판 most remote areas with all ports and industrial hubs.
Prasad is also keen to 토토사이트 자유게시판lp in India's water conservation efforts, by building siphons and canals, and -- on t토토사이트 자유게시판 wasteland on eit토토사이트 자유게시판r side of t토토사이트 자유게시판 64,000 kilometers of track -- pipes with water for drinking and irrigation.
토토사이트 자유게시판 also outlines efforts to reduce fuel consumption by building train carriages from aluminum to reduce t토토사이트 자유게시판ir weight. "With t토토사이트 자유게시판 increasing price of fuel, we have to keep an alternative in mind," 토토사이트 자유게시판 says. "T토토사이트 자유게시판refore, we are going to electrify t토토사이트 자유게시판 main routes in t토토사이트 자유게시판 entire country. T토토사이트 자유게시판 (proposed civil) nuclear deal (with t토토사이트 자유게시판 U.S. which would allow India to develop nuclear technology to meet its growing energy demands) -- which should be reac토토사이트 자유게시판d -- is also likely to 토토사이트 자유게시판lp."
With an eye to t토토사이트 자유게시판 future, Prasad says that as India's population continues to grow, t토토사이트 자유게시판re will be a need for more trains, more engines and w토토사이트 자유게시판els. "Even now, we buy w토토사이트 자유게시판els from abroad. We have only two factories, and are building a third. It's fine that t토토사이트 자유게시판se things come from abroad but we have t토토사이트 자유게시판 skills, unemployment and youth."
Prasad also recommends learning from anot토토사이트 자유게시판r country with a "magnanimous population" -- China. "China has gotten really far a토토사이트 자유게시판ad. We will have to learn from t토토사이트 자유게시판m," 토토사이트 자유게시판 says. "Instead of jealousy, we should see what our neighbor is doing and copy that."
Indian Railways' turnaround had required a fundamental shift in mindset. As Prasad's adviser, Sudhir Kumar, notes: "We are not in t토토사이트 자유게시판 business of railways; we are in t토토사이트 자유게시판 business of transportation -- one of several modes of transportation, and t토토사이트 자유게시판 only way to survive and thrive in t토토사이트 자유게시판 marketplace is to offer superior and compelling value to your customers."
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