 Mismanagement, manipulation, corruption and bad governance-attributes normally associated with Lalu Prasad Yadav. Rightly or wrongly, fairly or unfairly. His family's 14 year rule in Bihar only perpetuated this perception. Mismanaged, inefficient, loss-laden and customer unfriendly-traits normally attributed to the Indian Railways, the largest company in India in size, scale and assets. No wonder then that when Lalu was made the railways minister in May 2004, the fear was that the "Biharification" of Indian Railways was imminent. Lalu's initial obsession with the use of khadi and kulhars in the railways only heightened those fears. But 16 months after Lalu stepped into Rail Bhavan in Delhi, his report card looks delightfully different. On most parameters of performance, the railways are in the midst of an unimaginable turnaround with Lalu driving the organisation into a relatively transparent, customer-focused, efficient and above all a cash-rich entity (see charts). The turnaround in the railways is not only cyclical (driven by a booming economy and trade), but also structural (driven by fundamental improvements in the railways' functioning). Though these are early days, Lalu seems to be doing to the railways what P.V. Narasimha Rao did to the Indian economy in the 1990s. Driven by a combination of compulsion, competition and conviction (the last one most surprising), Lalu is pulling the railways back from the brink, just as Rao pulled the economy out of a debt trap. Recognition for Lalu's achievement came from no less than the prime minister, who recently wrote an effusive four-paragraph letter to the railways minister congratulating him and his officers for the "hard work and commendable success" and hoped that the Indian Railways continued to improve under Lalu's "able guidance". Validation has also come from former Railway Board officials, experts and, most importantly, from big clients of the railways in the cement and steel industries. So what is Lalu up to and how has he changed the railways? The first hint that the railways under Lalu may be turning around was visible in the financial results for 2004-5. The railways' earnings for the year was Rs 1,883 crore over the target, whereas working expenses had overshot the estimates by only Rs 400 crore. The result was a boost in profitability, driven by improved efficiency. The Indian Railways made the highest allocation in decades to its depreciation and development funds-indicating that it is investing in its future, rather than feeding on it. This when just four years ago in July 2001, an expert group headed by Rakesh Mohan had found the Indian Railways to be "on the verge of a financial crisis ... and operationally in a terminal debt trap."  | | Passenger Privileges | | | e-tickets, open tickets, automatic upgrades and an enquiry that works 139 HELPLINE  | ALL LINES ON THIS ROUTE AREN'T BUSY: Railway journeys can be frustrating or pleasant. But a railways telephone enquiry is seldom pleasant- frustration is almost guaranteed. Only a lucky few can get through to the enquiry numbers. After few mandatory minutes of "Please wait, you are in queue" fewer still get through to a human voice. What's more, the information given is often incomplete or incorrect. Come March 2006 and all this could be history, or so promise Lalu's officials at Rail Bhavan. In a revolutionary step, the railways plan to set up call centres with 250 phone lines or more in each state or railway zone. The universal number of enquiry will be 139 accessible from all over the state-including villages. Calls to the number will be billed as local calls, no matter where the caller is located. Two such call centres are already working in Patna and Bangalore covering Bihar and Karnataka. Call-centre operations will be outsourced. Since India is the hub of global call centres, the biggest and the best in business are keen to take up the railways project. One of the conditions put to prospective operators is that no caller to railway enquiry should be put on hold. The railways has specified that phone lines dedicated to call centres must be automatically increased before the existing lines get engaged. Eventually call centres won't be used just for enquiry-passenger will be able to book hotels and taxis to avoid the anxieties of commuting and boarding on reaching a station. For the railways, these value-added services could earn spare cash.
AUTOMATIC UPGRADE BUY SLEEPER, TRAVEL AC: Some four lakh Indians travel in reserved sleeper class every day. With luck-and without any extra payment-some of them may soon be able to travel in AC compartments. By October this year, railways hope to put in place a system of automatic upgradation of wait-listed tickets, if there is a vacancy in a higher class. So sleeper class wait-listed tickets will be confirmed in AC-III, while AC-III wait-listed ticket will be confirmed in AC-II and so on if there is a vacancy in higher classes at the time of the close of bookings. The software designed for upgradation will pick up waitlisted tickets randomly for confirmation in the next higher class. For passengers, of course, it is a bonus. They won't have to pay extra to travel in higher class. For the railways, it is as much an exercise in earning goodwill as in earning money. How? Every day, the railways returns Rs 8-10 crore for cancelled tickets. That's over Rs 3,500 crore of revenues foregone every year. The upgradation could help retain about Rs 500 crore. "We hope to earn Rs 500 crore in revenue and Rs 50,000 crore in goodwill," says Sudhir Kumar, OSD to Lalu Prasad Yadav. On an average, 53 per cent of AC-I, 38 per cent of AC-II and 22 per cent of AC-III seats go vacant, whereas the sleeper class' average occupancy is 112 per cent. So next time you are waitlisted on a rail journey, you may be in for a pleasant surprise. E-TICKET TICKETLESS TRAVEL: Since mid-August those booking ticket through www.irctc.co.in are asked: would you like an i-ticket or an e-ticket? An i-ticket is a normal ticket booked through the Net and delivered by courier. An e-ticket is actually ticketless travel-as a convenience, not as a fraud. The booking on the Net generates an electronic reservation slip (ERS) which can be printed. The print out and a photo id is all that is needed for the journey. Right now the facility is available only on Delhi-Kalka, Delhi-Amritsar and Delhi-Dehradun Shatabdis. And e-tickets can be paid for only with a debit card. Within a month the facility will be extended to all Shatabdis and Rajdhanis starting from Delhi, and subsequently to other cities as well. QUOTA RAJ RESERVATIONS: When it comes to quotas, the railways could have taught the Mandal Commission a lesson or two. There are quotas for defence personnel, women, foreign tourists, post and telegraph, railways headquarters ... the list goes on. Only about 55 per cent of the tickets are available for open booking. Though quotas don't necessarily mean loss of revenues, they complicate ticketing and breed corruption. Unfilled quota tickets are often sold in black. Under Lalu, two new innovations are being experimented with. A review of old quotas has freed 48,000 seats in the past one year and the railways have decided to display vacancies along with reservation charts. That will give wait-listed passengers an idea of a vacancy to which they have a claim. If they still can't find a seat, their ticket can be used another day. The railways will soon allow change in date, class or destination of wait-listed tickets. Also, Tatkal tickets can be booked three days in advance, unlike the 24 hours now and passengers don't have to travel with ID cards. With these measures, Lalu hopes to keep passengers from being lured away either to slowly but steadily improving highways or to the ever expanding low-cost airlines.
| | The performance since April 2005 has been even more spectacular. Earnings in the first five months of the current financial year have zoomed by 16 per cent-propelled by a double-digit rise in passenger and freight revenues. On almost all parameters, the railways' performance in 2005-6 is set to surpass the target for the year by a higher margin than it did in 2004-5. Sure, the Indian Railways' turnaround is fuelled by a booming economy and exceptionally good growth in key industries like steel and cement which account for the bulk of railways freight traffic. Besides, initiatives started during Nitish Kumar's term as the railways minister have also borne fruits. But while these external factors have given the big push to the railways, the credit goes to the ministry for being able to take full advantage of the good times by opting for pathbreaking steps. The Indian Railways' financial revival began in 2002-3 but its physical performance took big strides only in the past 16 months. On the freight side of the business-which accounts for 65 per cent of the railways' income and almost all of its profits-the big achievement is the reduction in the turnaround time of wagons from seven days in 2002-3 to 5.5 days, an improvement of 27 per cent. This amounts to adding a one-fourth freight carrying capacity without spending on a single new wagon. Besides, since March this year, railway wagons are carrying 8-16 per cent extra load, adding that much more to the freight capacity. Again, this was achieved at marginal additional cost. As a result of these and some other measures, profit margins in freight have doubled since 2001-2 from 13 paise to 26 paise per net tonne kilometre of freight carried. | | CATERING AND PARCEL BUSINESS | | | No More Free Lunches ... and Luggage |  | CASH AND CARRY
Freight income has risen by Rs 2,800 cr in two years | | Kalka Mail is one of the 252 trains of the Indian Railways that run with a pantry car. Till 2004-5, the annual contract for the supply of food on the train was worth Rs 4.99 lakh. This year, the contract was renewed for Rs 83.60 lakh-an increase of 1,575 per cent. The train will run the same distance this year as it did last year and it will carry about as many passengers. So why did the value of the contract shoot up so spectacularly and so suddenly? Simple: till last year catering contracts on railways were given to applicants often on the recommendations of politicians and other heavyweights. Rates remained fixed at historical levels. Under Lalu Prasad Yadav, catering contracts are being given through competitive bidding. The shift from application-based to bidding-based contracts is proving a windfall for the railways (see table). This shows the crores of rupees the railways have been losing in the catering business. Worse, it wasn't even benefiting passengers, because it was the contractor who was feeding at the expense of the railways and taxpayers. Sudhir Kumar, OSD to Lalu, expects to earn over Rs 200 crore from catering contracts in 2005-6 which will cut accumulated catering losses of Rs 500 crore by 40 per cent. He hopes to break even next year. But this is only the tip of the earning potential from catering. There are about 9,000 food stalls on railway stations across the country, the contracts for which have also been doled out at abysmal rates in the past. For instance, the licence fee for food stalls at Howrah station is frozen for over a century-since 1870 to be precise. Once these stalls are put through competitive bidding, the railways' kitty could swell by Rs 1,000 crore-or more. If catering losses were indefensible, parcel losses are almost scandalous. Every non-suburban passenger train-there are 4,500-runs with two brake vans. One behind the engine and another at the rear. These vans serve a dual purpose: a safety buffer in the event of a head-on or a tail-end collision and as parcel and luggage carrying space. Each train can carry 16 tonnes. That multiplies to 25 million tonnes of parcel carrying capacity in a year in all trains. Add 7 million tonnes annually from dedicated parcel vans, and the total capacity works out to 32 million tonnes. This should earn the railways over Rs 3,000 crore a year. In reality, the railways loses over Rs 500 crore a year on the parcel business. Official reason: less than 20 per cent of the parcel capacity is actually used. Anybody who has been to the cargo area of railway platforms would find that hard to believe. Obviously, the luggage vans (or parcel vans) are running at much higher than 20 per capacity, only the railways is not getting paid for the parcels it carries. The earnings are pocketed by middlemen, inside and outside the railways. Here too Lalu's prescription is the same: go for competitive bidding. The gains have been phenomenal (see table). Kumar expects to wipe out losses by 2006-7 and make the parcel business profitable by the following year. Ironically, it took a man like Lalu to teach the railways how to run its businesses | | Index
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