Railways-the transport for global economy (A case study of financial turnaround of Indian railways)

Indian railways is now over 160 years old and has come a long ways since it made its maiden run on April 16, 1853. The gradual transformation of the Indian railways and the milestones it has achieved during the long journey has made the country proud. But there is a other side of the story also that the Indian railway is half-way between a commercial and social organization. Any attempt to make it purely commercial, or purely social would disintegrate this institution. Due to the dual objective i.e. social as well commercial, the railways has been running losses for past many years, and it, in fact, has endangered its very existence. Several committees have been constituted to suggest about the weakening financial position of Indian railways. One such committee was the Rakesh Mohan Committee (1991), which found the railways as totally an un-viable government sector organization. After reading the report of this committee and many other like committees, one would like to conclude that Indian railways has no potentials and to run it for any more, would entail only losses to the exchequer of the government.

But contrary to the general impression which was there after the startling disclosures of these committees about the non-viability of this huge organization, the Indian railways has taken a complete ‘U’ turn (especially after 2005) and has transformed itself from loss making enterprise to profit generating industry. Indian railways which was running into losses, has suddenly started producing surplus of crore of rupees. This transformation is generally termed as the “Turnaround” of Indian railways by the observers. There has been considerable interest in the recent past in the media and amongst the public about this remarkable “Turnaround” of the Indian railways. This research paper is an attempt to critically analyze the financial turnaround of Indian railways. The findings of the paper support the claim of happening the Turnaround in the financial health of Indian Railways.