How Lalu Prasad Yadav converted Indian Railways into a gold mine
Added: (Wed Mar 14 2007)
Pressbox (Press Release) -
New Delhi, 14th March 2007.As a journalist "covering" the Railway beat for several decades, the present writer recalls a debate he had with a railway officer in the third year of the Janata party rule in 1979 about the best performance of the Railways in the recent past – during the last year of the Emergency rule of the Congress Party in 1976-77 or the first year of the Janata Party rule in 1977-78. The indicator for our debate was the volume of freight traffic handled by the Railways during these two periods. Well, the records in both these years were more or less the same, just above 200 million tones.
This volume of freight traffic was considered an epic success story of Railway Minister Madhu Dandwate, more so because he along with George Fernandes had led the Railway strike of May 1974, which had disrupted the services across the country to a large measure for a few days.
Today, towards the end of the financial year 2006-07, the freight loading is set to achieve the target of 726 million tonnes and Railway Minister Lalu Prasad is quietly confident that the target he set for loading in the Railway Budget for 2007-08 presented to Parliament on Feb. 26 would be fulfilled. That target is 785 million tonnes. Mind-boggling? Perhaps yes.
But not if you go diligently through the budget speech he had delivered not on Feb.26, 2007 but one year earlier, on Feb.24, 2006, you may be able to discover the "secret" of his success story par excellence. That year, one may recall, was the year of record- breaking loading of freight and carrying of passengers, both showing unprecedented rates of growth. Mr. Lalu Prasad had revealed without any reservation the "secret" of his success in earning record "excess" (the word) " profit" is normally not used in railway accounting system) in that speech.
So, for the benefit of those somewhat miffed by the aggressive claims of success by Mr. Lalu Prasad, here is the "modus operandi" unveiled by him in his budget speech last year. The formula for success was so simple that only the rustic wisdom of a leader like Mr. Lalu Prasad and his supporting staff could devise.
Most people have no concept about how prodigiously rich the Railway system in India is in terms of its assets – land, the permanent way (the tracks), the station infrastructure and station buildings, the rolling stock (locomotives, coaches and wagons) and the overall goodwill for the system which can transport you from New Delhi to Howrah by Rajdhani Express in air conditioned three-tier class with bed and dinner provided along with breakfast and morning tea within a little more than $30 per head and in less than 18 hours.
What Laluji did was to plan exploitation of the railway assets to their optimum level and thus effectively "milking" them for the benefit of the society. For example, let us consider the case of a superfast express trains hauled by an electric locomotive. Normally, the 5000 Horse Power WAP-4 electric locomotives haul these trains. These locomotives are capable of hauling 23 or even 24 coach trains at speeds of even 140 kilometres per hour (kph). So far, 21 coaches were considered to
the maximum load for these locomotives. For various reasons, including the absence of long enough platforms at stations where these trains halt, the loads of these trains have been kept down. Laluji felt that the locomotives had spare capacity and they must therefore haul more coaches. Orders were issued to lengthen the platforms. So, a train of this type would carry three more coaches per train meaning almost 200 more fare-paying passengers per train and making it more paying. Some excess expenditure has to be incurred for higher fuel consumption – electricity in this case - but the extra earnings would far outweigh this small increase in investment.
The magic "mantra" coined by him and his supporting staff was "lowering unit cost of operations". This is as true for passenger services as for freight operations, more so because freight is the bread of the railways while passengers provide only the butter part of the repast.
Let us quote a relevant paragraph in this regard from his 2006 budget speech: "In the current year, we are fast moving towards establishing a new record of 668 million tones with a historic growth rate of 11 per cent. This is the second consecutive year when we have increased our market share with a growth rate higher than the growth rate of the economy. This record breaking performance has been possible through reduction in wagon turn round time and through additional loading of 4 to 6 tonnes per wagon. This has enabled an increase of 100 mt. (metric tonnes) in our loading capacity and generation of over Rs.5000 crores in freight revenues. This is the foundation of our financial turn around". So simple, isn't it?
However, this is not the sole criterion for the historic turn around of the Railways. The days of four-wheel, open or closed wagons for carrying freight are over. The wagons now, almost without exception, are of the eight wheeled "bogie" wagons. (A bogie is actually the steel frame encasing four wheels for passenger coaches or freight wagons. The passenger carrying vehicles are called coaches, not bogies).
With two axles each per bogie, wagons now have four axles, which determine the maximum loads these eight-wheeled "bogie" wagons can carry. The load per axle has been of the order of 18 tonnes so far for a BOXN (B for bogie, O for open, X for side discharge and N for new) wagon was loaded with 56 tonnes of mainly-coal. Laluji has decided to increase the load per axle by one to two tones resulting in additional loading of four to eight tones per wagon, leading to overall increase in loading without incurring much additional expenditure. The same principle of reducing unit cost of operations.
However, he and the Railways are aware that wagons designs have to be changed with higher axle load capacity for sustaining this incremental carrying capacity. So, he has introduced 23-tonne per axle capacity wagons and – this writer saw it at the Amritsar workshop of the Northern Railway- new design high speed wagons fit for running at 100 kilometres an hour speed. These are known as the BOXNHS (H for high and S for speed) wagons which will run in future on the dedicated freight routes, which is now to be launched. As a fall-out of this concept, the brake vans – known as the caboose in the West – are also to be upgraded and have to be of the bogie type (eight-wheelers), so our poor, lonely guards of freight trains will have more commodious brake vans in future. Such a prototype brake van has been manufactured at the Amritsar workshop.
The Minister is more ambitious. He is planning freight trains with 25 tonnes axle loads for two selected non-passenger-carrying routes. They are the Bailadilla-Rjhara route in Chhattisgarh for carrying iron ore to the Bhilai Steel Plant and the Daitari-Banspani route in Orissa for carrying export iron ore cargo from the Paradip port.
The Minister has not spelt it out so far, but one suspect that he has in mind the huge loads carried by freight trains in South Africa. In that country on a narrower "cape gauge" of 1067 millimetres "consists" of three electric locomotives can haul up to 20,000 tonnes of iron ore per train.
Encouraged by the positive response from the trade, Mr. Lalu Prasad has now set his sight at achieving a loading target of 1100 million tones during the concluding year of the eleventh plan in 2011-12. Besides, he has set the target of loading both, cement and steel, the prime movers in his turnaround venture, to attain loading target of 100 million tones each by that time.
Revert back to passenger traffic. Very soon, in fact from the 2007-08 itself three-tier non-air conditioned coaches will have 84 berths each, instead of the customary 72. The three-tier air-condition sleeper coaches will have 81 berths instead of 64 as at present. These will therefore fetch, with no additional inputs in terms of coaches, substantial additional revenue per train. Although he did not mention this, it is obvious that he has the new design coach shells of the German design (the LHB coaches), which will provide additional space for enhancing the capacity of the passenger coaches. The AC two-tier coaches will carry two more passengers each and so would be the AC first class coaches. In order to encourage people to travel by these new coaches, a bit crowded, the Minister has announced that off-season reduction in ticket charges would apply only to such coaches and not the older design coaches. Sound business sense, one would aver.
The decision taken in 2006 to convert a large number of ordinary express trains into superfast express trains did help the Railways garner more money because fares for all classes in these trains are higher. But there was another falls out. Higher speed meant lesser time to traverse distances, leading to higher availability of coaches. So, without spending money on building new coaches – this is proceeding as per plan of course- the Railways got more coaches to run additional services or run longer trains with 23 or 24 coaches. The domino effect, one might say.
There are other areas too, not easily perceptible for ordinary mortals, from where more income per unit at reduced cost can be profitably milked. Laluji might have left them for the present, perhaps to be revealed when he presents the 2008-2009-railway budget towards the end of February 2008.
Mr. Lalu Prasad is neither an engineer nor an economist. But his robust common sense has made the Railways a success story, which attracted students of Harvard and Wharton universities to study the phenomenon, and which made the Indian Institute of Management, Ahmedabad, start a chair for railway study in this prestigious organization.
While concluding, this correspondent is reminded of another Railway Minister, also of very humble origin in personal life, who gave Indian Railways a head start by taking a series of decisions which are benefiting his successors. He was Mr. C.K. Jaffer Sharief, Railway Minister during 1994-95. He had laid the foundation for the metamorphosis of Indian Railways by undertaking the Project Unigauge programme, signing the agreement to import with technology transfer clause the so called ABB electric locomotives (three-phase alternating current locos), and the LHB coaches design from Germany.