Getting India's Railroads On Track

27 June 2008, TIME magazine, By Simon Robinson

Until the past few years, Indian Railways (IR) itself was sunk in a languorous snore. The state-owned company, the monopoly owner-operator of the country's rail system, runs 12,000 trains a day over 39,000 miles (62,750 km) of routes, making it the world's largest railroad under a single administration. It was also notorious for being slow, inefficient and requiring constant government bailouts. But over the past six years, India's most important form of transport — "the lifeline of the nation" as it is often called — has undergone a remarkable turnaround. In its fiscal year ending March 2007, Indian Railways made more than $5 billion. Services are improving and rail bosses have announced plans to spend billions on new rolling stock, faster lines and new stations. Though it still gets government funding, IR is now India's second most profitable state-owned company. "Earlier we were dragging the economy down," says Sudhir Kumar, whose official title is officer on special duty to the Railway Minister, and who has helped oversee the revitalization. "Now we are leading the economy from the front."

The resurrection of India's railroads was a three-step process that has been so successful it is studied by visiting business students from places such as Harvard, Wharton and INSEAD. The first step: speed things up — not the trains themselves but the turnaround time between the end and beginning of each new trip. In 2001 the average time to unload, repair, refuel and reload a freight train in India was 7.1 days. Now it is just five days, which means that 800 trains leave on a new journey each day, rather than just 550. Given that an additional trip can earn up to $15 million, the improvement made an important contribution to IR's bottom line. IR also made sure each freight locomotive carries more cars, hence more cargo. That brings in an extra $1.5 billion a year, according to Kumar, who compares the railroads under old management practices to "a Jersey cow that we forgot to milk fully."

Finally, passenger trains have also been increased in length. Until a few years ago a typical train had about 15 carriages. IR officials discovered that a passenger-train journey could earn a profit with 24 carriages, which became the target length. By pushing the "quicker, heavier, longer" mantra, rail bosses have also been able to improve services. For example, in 2006 IR began offering special express trains on certain routes such as the run between New Delhi and Agra, home of the Taj Mahal. Tourists making day trips to India's most popular tourist attraction now can book online and sit in comfortable seats during a trip that takes less than two hours instead of almost three. Even on longer, slower trips the catering, which is now outsourced, has improved.

The man many people credit with rail's comeback is Minister Lalu Prasad Yadav, a controversial figure, as his term as Chief Minister of Bihar was characterized by mismanagement and corruption. Yadav is certainly lucky that he's heading Indian Railways during a period of tremendous growth in India. The company is minting money hauling freight for mines thanks to the massive demand for iron ore in China, to cite just one example. Contracts with mining firms are now linked to the price of ore rather than "set in concrete like in the old socialist fashion".

Hoping to grab more of the long-haul freight business lost to truckers in recent years, rail bosses plan to borrow at least $15 billion to build a dedicated fast-freight corridor between Mumbai, New Delhi and Kolkata. They also have big plans for some of the 1 million acres (420,000 hectares) of land that IR owns along rail lines and around stations and shunt yards. Real estate developers are currently bidding to overhaul the first of 16 major stations. At New Delhi's central station, which is likely worth billions of dollars, developers plan hotels, wireless Internet services and food courts.

Still, IR has miles to go before it can be called a first-class operation. Train travel in India remains infuriatingly slow for the 18 million Indians riding a train on any given day. A 1,378-mile (2,217 km) trip from New Delhi to Goa just before Christmas, for instance, took me 35 hours, almost a day longer than a train trip over a similar distance in Europe would take. Because of a lack of equipment and tiny station platforms, freight is sometimes thrown from trains in heaps. The heavier loading, critics charge, has caused more breakdowns. Older carriages can be dirty, shabby and full of cockroaches — and that's in upper class.

"Railways were in a denial mode, living on past glories from when we were a natural monopoly," Kumar says. "Now we have to compete — and we are."