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Sunday, February 15, 2009

The real truth behind the success of Lalu at Railways

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I stumbled across an extremely interesting article, thanks to a post on Ajay Shah's blog which I regularly follow. It is an extremely exhaustive account. Do go through the entire article. Here some of the interesting points:

  • "The world’s only employer larger than Indian Railways is the People’s Liberation Army of China. (The third-largest employer is the British National Health Service.)"
  • "Lalu's single most important innovation at Indian Railways was not a populist move at all. It was an elite one: the hiring of a prodigiously talented civil servant named Sudhir Kumar."
  • "Kumar’s two flat-screens show real-time data on the country’s main routes. Periodically, a minion walks into Kumar’s command center to present a 20-page stack of papers that represent the day’s statistics on passengers, freight, and on-time arrivals. “Like Jack keeps a daily tab, I also keep a daily tab,” Kumar says, referring to Jack Welch, one of his idols. The contrast with Lalu’s own listless inattention is jarring. When Lalu tells me about his success, mumbling vaguely about winning “the confidence of the business classes,” Kumar shouts from the back of the room, citing revenue figures from memory."
  • "None of the innovations was original. All sound, in retrospect, like no-brainers: make the trains faster, heavier, and longer. Kumar wrinkled his nose when I pointed this out. “A five-billion-dollar no-brainer!”"
  • "He may not have increased the fares directly but he has increased the speed of several trains. Once the speed increases beyond a certain point, it qualifies for the super-fast category, and thus its fares is increased, without catching any attention"
  • "The number of coaches in several trains have been increased thus per unit cost has been reduced"
  • "Lalu mismanaged Patna terribly. So how has he managed a gargantuan state organ so well that students from Kellogg and Wharton are taking notice? Part of the answer lies in India’s recent economic growth spurt: Lalu stood on the shoulders of an economy that never grew by less than 6 percent per year during his whole tenure as railways minister. (India’s economy has slowed considerably since the global downturn began.) With a boom like that to fuel demand, how could he fail? All he had to do was sit back and let the market propel him forward"
To add to that, if we look at the Indian scenario, passenger traffic has historically been cross-subsidized by charging more on goods traffic. Infact many industry leaders have criticized his interim budget saying that he hasn't done enough to bring about parity between pricing of passenger traffic and goods traffic, particularly in a recessionary scenario. Indian railways has been loosing its market share in goods transport for many years to the road transport. Even in his latest budget, he has gifted trains to Bihar, whether or not those routes are feasible is a different issue.

Nevertheless, I would have acknowledge one thing - "Lalu is still awesome when it comes to getting media publicity. After he was routed in Bihar, he realised that he needed an image makeover. What better platform could he get other than Railways, the largest employer of India. And he has successfully achieved that and even earning praise from the IIMs and Harvards of the world."


  1. "The American" article was indeed a kind of an eye-opener, however, other decisions by Lalu like kulhar and outsourcing railway food were not touched upon.. That would have given a clearer picture

  2. Ya, Laloo is like any other smart worker. He wants to take all the credit.

    I can't believe he's gonna be introducing side-middle birth in trains. I mean, what? I am so sure, he's trying to do what he did with goods train, but he's forgetting that humans are no goods!! Our already over-crowded trains will become even more crowded, thanks to him!

    I read the whole article in AMERICAN. That site is awesome, I read so many other articles as well. Thanks for that. I am a wana be Business graduate too, so it will help :).