The Indian Railway I

The Indian Railway is the world’s largest employer. The main lines were built in British times. Mostly to move the army around to quell rebellions in different parts. The Madras regiment in Punjab, the Punjab Regiment in Assam and so on. But later, it also became the common man’s mode of travel in India. For a few dollars you can go from Chennai to Delhi or from Mumbai to Kolkatta. The trains are slow and the bathrooms are–ahem–aromatic. The food is of questionable hygiene. But you will see the countryside, and most likely make some friends. In the long distance trains, if you have a sleeper berth, the journey is comfortable but not luxurious. I am not talking about the palaces on wheels meant for foreign tourists.

I know this world well because I grew up on trains. My father, both grandfathers, several uncles and assorted cousins, all worked for the Railway. If things had gone slightly different in my life, I too would have been a Railway employee. I would have been an engineer or mid-level manager, far above the level that my relatives were able to achieve, because I was better at passing exams.

Back in the early eighties, it looked like a dead end. The Railway ran at a huge loss. It was thought of as a public service, subsidized by the taxpayer. The trains were always late. No body paid for anything. Goods (freight) trains carried much more weight in reality than the books showed: the employees in charge pocketed the difference. It was indeed the corrupt system that my colleague was talking about, in his casual comment. There was a traumatic strike in 1974 which was put down by brute force by the Government, using emergency powers originally granted to fight the 1971 war against Pakistan.

IR is still wholly owned by the Indian Government. The trains still run as late as they ever were. But more and more people are using them. New routes have been built. The employees have been getting regular raises. Not much talk of strikes anymore. I would know, I still have many relatives working for the Railways and they are all solid union members. They have cut fares.

And, almost unique among mass transport systems in the world, the Indian Railway has been making profits: $2B in 2005, $3B in 2006, $4B in 2007, $5B in 2008. Gross Income is growing at over 10% annually and is currently about $20B.

How did this happen? In another post I looked at what went wrong at General Motors. What went right in the Indian Railways? Some of it is clearly just the overall growth of the Indian economy. When the economy booms, as in the past five years, the Railway benefits too. So we should watch if they can sustain the growth in the tougher environment prevailing today. But it is not the whole story.


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