Indian Railway Turnaround Essay

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ASARC Working Paper 2008/06 Financial Turnaround of the Indian Railways: A Case Study Desh Gupta and Milind Sathye* Faculty of Business & Government University of Canberra, Canberra, Australia. 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) also contribute to the success. The implication of our study is that an organisation’s turnaround success needs to be put in a wider context. Email: Milind.Sathye@canberra.edu.au T: 612 6201 5489 F: 612 6201 5238 *Corresponding author 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

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