Friday, April 14, 2006

NEW DELHI — A visitor to the New Delhi railway station could not be faulted for thinking nothing has changed. Tobacco stains still speckle the platforms, bleary-eyed travelers are sleeping on the floor, and a stink of garbage rises up from the tracks.

But after a few minutes wait, the tracks bring a fresh sight: A high-speed train capable of traveling 93 miles per hour pulls up, the first of its kind in India. A trip that used to take four hours now takes two. And this is just the beginning.

The man who brought about this transformation is an unlikely sort. Railway Minister Laloo Prasad Yadav was formerly known for cracking jokes in rough Hindi, corruption scandals and ruling over chaotic Bihar state. He even poured cow dung over the heads of some reporters at his recent party celebrating Holi, a Hindu holiday welcoming spring.

But few now doubt that Mr. Yadav has presided over an impressive business turnaround. He’s the darling of industry groups and business newspaper headlines, doling out privatization of container traffic and 24-hour food courts. But 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.

D.H. Pai Panandiker, head of RPG Foundation, an economic think tank, said “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.”

Contradictions abound

It wasn’t so long ago when India’s corporate community was fiercely opposed to Mr. Yadav. Last year, he announced, “A ban will be imposed on serving cold drinks like Pepsi, Cola and Fanta in trains. … From now onwards, passengers would be treated to milk, buttermilk and other tasty drinks.” He also attempted to ban plastic cups from being served on trains, replacing them with “kulhars,” which are handmade mud pots often used to serve tea in rural areas.

Yet, now, the Railway Ministry has announced it will allow 4,000 soft-drink vending machines in stations within a year, as well as bank automated teller machines. All this has brought up questions concerning Mr. Yadav’s sudden change of thinking. Indian Railways refused to comment on questions about this.

Among the huge government-owned businesses that dominate the landscape here, success stories are few. Indian Railways has provided the backbone of transportation for the country since British rule; though important, it was rarely looked upon as something pleasant to ride or profitable to run.

With its separate budget announced just before the federal budget each year, fare cuts were announced with fanfare to win over voters. Meanwhile, though, Indian Railways was drowning in debt. Air-conditioned-class fares were routinely raised to keep the operation afloat.

“We understand the needs of the market and our customers. In today’s competitive environment, we can’t increase demand by hiking tariffs,” Mr. Yadav said in a recent interview. And there is no doubt about the increasing competition: Truck and road transportation had been eating away at the railway’s freight business for decades, and burgeoning budget airlines were luring away upper-class train passengers. Many chief executive officers of new airlines concede they are in direct competition with Indian Railways.

Rising tide lifts all ships

With Indian middle-class salaries and expectations rising, most families are not content to be crammed into dusty train cars for a three-day ride when they could pay a bit extra and fly.

It is a reflection of India’s new-found economic strength that Mr. Yadav has also proposed a new rail-passenger class — air-conditioned compartments priced for the poor. Considering the current sweltering conditions of lower-class railway cars, the concept is revolutionary.

Other revolutionary ideas are on the way. Privately run budget hotels, which will cater to India’s growing number of foreign tourists, are approved to be built on land owned by Indian Railways stations.

Fourteen corporations have bid to carry freight in the newly open cargo sector. This will do much to help the choked transportation system in this country, where rail cargo containers sometimes take nearly five days to unload.

But not everyone welcomes these changes. Previous contract holders for Indian Railways catering bristle at the thought of opening up new bids for food service. They have filed more than 70 lawsuits, though Railways has won nearly all of them. After getting rid of cronyism, the size of the mobile food business has increased nearly tenfold during the past year.

It is a lesson often cited by Prime Minister Manmohan Singh, who was also the economic architect of India’s liberalization in 1991. Mr. Singh is pushing to eliminate failing public corporations and introduce transparency in contracts as his government gallops to keep up with India’s growing international image.

He may find it comforting to know that Indian Railways — the biggest monolith of all — is well on the way to reform “the biggest engine that could.”

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