Indian Railways

In: Business and Management

Submitted By arsal
Words 20854
Pages 84
Financial turnaround of the Indian Railways:
Good Luck or Good Management?

Abstract
We analyse the factors that led to the turnaround of the Indian Railways from a low performing organisation to a high performing one. Literature on public sector turnaround provides the theoretical underpinnings. Enterprise turnaround is often ascribed to managerial leadership; we found that environmental factors (good luck) contributed in a substantial way to the success of Indian Railways. The implication of our study is that an organisation’s turnaround success needs to be put in a wider context.
D. Gupta & M. Sathye Financial Turnaround of the Indian Railways
ASARC WP 2007/13 3
On 15 April 2006, the Washington Times carried a lead story on the turnaround of the Indian
Railways (IR) — a departmental organisation run by the Government of India (GOI). It stated
‘…few now doubt that Mr. Yadav (Minister for Railways) has presided over an impressive business turnaround ….more importantly, he’s taken the world’s largest employer — a government giant of 1.5 million employees — and boosted revenues by 15.5 percent without raising fares’ (Nelson, 2006:1). Pai Panandiker states ‘Indian Railways has turned around and made an estimated profit of $2.5 billion in 2005-2006. What is important, however, is that, unlike previous ministers, Mr. Yadav has looked upon Railways as a commercial enterprise and not a social welfare institution. [He] is a hard taskmaster and will ensure his subordinates carry out the projects’ (Pai Panandikar, 2006:1). The former Railway Minister (Mr Nitish
Kumar), however, claimed that the foundation for the turnaround was laid down by him, the results of which are being realized now. In the media interviews, he charged that Mr Yadav
(who became the Railway Minister in May 2004) is usurping the credit for the IR success. It is important to note…...

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