Harvard Planning Seminar On Management Of Lalu Yadav
Friends,
Since Management Schools and Press didn't fully appreciated extra ordinary achievements of Lalu Yada that are absolutely rare in corrupt developing countries I have tried to do justice to him. It was actually "Quadruple Achievement", he firstly made Indian Railways profitable and self-sustaining, secondly he proved it doesn't require Oxford or Harvard qualification to perform, thirdly substantially increased the capacity utilization of fuel-efficient transport and fourthly but most importantly showed to the world how the most corrupt Indian Railways can be tamed easily and made to perform.
This I think is his singular most important contribution to India and the world that need be rewarded by Nobel Prize.
It is fact that Sonia Gandhi is thrilled by the performance of Lala Yadav and her support for Manmohan Singh is a forced choice being an old loyal congressman this we could see in parliament debates. I am covering things that I observed over last 28 months.
The BusinessLine article precisely describes success of Indian Railways.
Firstly it must be emphasized that the credit for Railways turnaround entirely goes to Lalu Yadav and none other though Nitish Kumar dishonestly and sheepishly tried to take away a part of it.
Unlike Manmohan Singh who gets Tuition Classes Secretly from congenital criminals like Mukesh Ambani, Lalu Yada relied on Sudhir Kumar IAS and on his own instincts to catch the raging bull of corruption that was Indian Railways from its horns and tamed it and milked it.
So jealous were Manmohan Singh and P. Chidambram that they removed the Infrastructure performance of railways from MoF monthly reports.
He personally led, conducted and supervised raids of Railway sidings and trains carried out stock verifications. He dismissed the staff engaged in corruption something no railways minister dared in the past.
He found "Under Invoicing Of Goods In Quantity and Rates". When he found wagons were overloaded, he increased loading limit of wagons that cut down corruption and loot to bare minimum.
When a Railway Minister is heading the vigilance team for corruption in goods operations at midnight Indian Railways was bound to wake up and move at optimum speed. Wagon loadings and turnarounds increased dramatically.
In spite of very substantial Railways freight traffic increase we find little slow down in Roadways traffic that clearly indicates massive corruption that has been curbed that translated in to revenue for railways though freight rates were reduced and incentive schemes introduced.
Last year around this time Star News carried a story about "Rigged Meters" in the heart of National Capital, Star News invited Ministers and CEO of BSES J.P. Chalsani to for on site testing of electronics meter none came. Had Lalu Yada been then Energy Minister he would have offered to be part of the Star News meter testing drive and menace of Rigged electronics meters would disappeared from India.
Corruption is the dividing line between success and failure.
The day Lalu Yadav is made Prime Minister Indian economy shall be zooming. He will shut down all Manmohan Singh's nonsense ideas like SEZs.
He will ask industries to improve capacity utilization and productivity, insist on full accounting of production and sales, promote high-tech industries and shut down bogus export firms.
As in charge Petroleum Ministery he will land at Jamnagar Reliance Refinery with his auditors and ask for records to ascertain how much loss Reliance caused to India by way of bogus Exports, Exports Incentives and Tax Breaks.
It requires just two days to reform the Petroleum sector.
Let Sonia Gandhi make him Deputy Prime Minister in charge of reforms and management of economy, in first full year India shall have $100b surplus revenue.
Government will be in a position to abolish service tax and raise Income Tax exemption to Rs.0.5 million incomes. There will be no problem in giving credits to farmers and SMEs.
Ravinder Singh
Ravinder Singh
September25, 2005
Lalu comes to IIM-A with new image
http://inhome.rediff.com/money/2006/sep/18lalu.htm
Sheela Bhatt in Ahmedabad | September 18, 2006 | 12:23 IST
http://inhome.rediff.com/money/2006/sep/18lalu.htm
Sheela Bhatt in Ahmedabad | September 18, 2006 | 12:23 IST
Union Railway Minister and Rashtriya Janata Dal president Lalu Prasad Yadav wants to do something that even Amitabh Bachchan cannot do: an image makeover.
Lalu wants to cleverly manipulate the perception of him outside his home turf of Bihar.
The master tactician of Indian politics is embarking on a difficult assignment, of changing his brand-image, in the middle of his political career, but more interesting to note is that, so far, he has been somewhat successful.
No, this is no Lalu Joke, the railway minister is dead serious. He wants the media and the political class to leave behind the administrative mess he created within Bihar during his 15 years of rule. Lalu's confidants are requesting the media to stop equating him with a buffoon and take a fresh look at the latest statistics from the railway ministry under his leadership.
His PR advisors want the media to acknowledge him as Lalu Yadav, Master of Business Administration.
The new venture, starring Lalu Yadav, has been scripted by himself and produced by his political ambition.
After losing power in Bihar and humiliated and humbled, Lalu doesn't want to remain outside the public domain.
To keep getting attention from the rest of India, Lalu is participating in an institution where even a few months ago his presence would have been considered most unlikely: the premier Indian Institute of Management, Ahmedabad.
Today, at 2 pm, in a class-room in IIM-A, 16 students of the post-graduate programme in management for executives (PGPX) will present a PowerPoint debating Lalu Yadav's various management decisions in the railway ministry.
Lalu is 'material for case study' because Indian Railways, which defaulted in paying dividends worth Rs 1823 crore in 2001, is today profitable with its treasury boasting of a Rs 12,140 crore turnover.
IIM-A students have examined the issue of "turnaround" of a monstrously big organization like Indian Railways under Lalu's leadership on the basis of a 120-page long document prepared by IIM' professor G Raghuram, chairman of PGPX.
Professor Raghuram told Rediff.com, "Lalu Yadav has energized Indian Railways. His consistency of direction has played a role, yet at the same time he is staying away from interfering at the operational level of decision-making."
In Lalu's presence, Professor Raghuram and his students will debate if the turning around of a loss-making Indian Railways into an impressive success story is for real or hype.
Professor Raghuram, who has studied the functioning of Indian Railways thoroughly, believes, "The railways' turnaround is not hype because the net revenues have increased from Rs 5000 crore to Rs 8000 crore.
"By increasing 'axle-loading' of wagons and combining it with a market-oriented approach, Lalu has contributed in the success of Indian Railways."
According to a member of the core group in the top railway management, "Lalu Yadav has so far believed that people don't care for development as much as they do for emotions. His voters told us, Swarg nahin swar diya (Lalu gave them voice to them if not heaven). But now Lalu thinks it's time for him to change and take up developmental politics."
The railway top brass are talking about how Lalu is shaping his leadership with a human touch. Recently, Lalu was presiding over the farewell function of a retiring senior railway employee, and found the officer a little depressed. He asked him why, and the employee said since he married a little late in life his financial responsibilities towards his family are not yet over and after his retirement there would be no income.
Lalu on the spot asked the chief of Railway Board J P Batra to give a job to the retiring employee's elder son. Needless to say, the event turned emotional and Lalu gained.
His senior officers claim that Lalu has for the first time changed the approach and mechanism of supervision of the regions by the head office.
Indian Railways is divided into 16 zones, each headed by a general manager. The 16 zonal headquarters have 67 divisions headed by a Division Regional Manager. In addition, it has nine production units.
Previously, railway ministers were close to the Board which is excessively powerful body. But Lalu is now making the head office closer to GMs and DRMs, thereby improving the supervision of GMs' performance, making them more responsible and accountable.
Another important factor is that Lalu Yadav's team is reclassifying the management of goods transport.
According to an IIM study, the railways have increased the freight volume but now the maximization of the use of wagons is making a huge difference to the bottom-line.
It may be difficult to believe, but Lalu as railway minister has changed wagon management entirely by reducing corruption with the help of new benchmarks in administration.
Since the last many years the goods wagons would carry a load of around 20 tonnes per pair of wheels. A wagon with, say, three pairs of wheels would thus be carrying 60 tonnes.
This gave scope to a multi-million rupee scam. Per wagon an excess of around 15 tonnes of unaccounted goods was being transported, and the money went to the dubious nexus of railway managers and private contractors. But Lalu took a decision to increase 'axle loading' (the permitted limit of weight carried by each wagon), which left no scope for excess goods.
In typical style, Lalu has popularized the delightful slogan to carry forward his message.
He says, "You have to milk the cow, otherwise she will become sick.
The railway wagons are giving profit but that's not enough, you have to maximize the use of wagons."
Lalu says railway wagons are like "a cow ready be milked."
Not only has he increased the permissible weight limit to 22.5 tonnes and bringing in more money, he has also forced more rounds of wagons every month. Previously unloading of goods at destinations was done only during office hours but now unloading is done round the clock. Previously each wagon used to travel four to five trips per month but now wagons make eight to 10 trips.
Also, Lalu has put more resources in geographical areas where more traffic and revenues are being generated.
However, Lalu cannot shed his political colours entirely.
He has ensured that his constituency Chapra in Bihar gets a big pie of the railways' development projects. A railway wheel factory and loco manufacturing projects are planned for Bihar.
Thus Lalu's road-show will not end at IIM-A. He has also been invited to lecture at the Lal Bahadur Shastri National Academy of Administration in Mussoorie. A French think-tank wants to do 'research' on him, and Jeffrey R Immelt of GE and the Suzuki chief are seeking an audience with him.
Harvard University, reportedly, is planning a seminar in Delhi to hear Lalu's views on management and the economy.
And, his advisors tell the media that with the Congress not improving its grass-root infrastructure and the Bharatiya Janata Party facing an acute leadership crisis, who knows what would be the outcome of the next general election!
Who can rule out that Lalu Yadav, the great grass-root politician, has a lot of potential in the uncertain Indian political environment created by the weaknesses of the two major political parties?
Happy not to be at IIM-A
Sunil Jain | BS | September 25, 2006 | 13:22 IST
Sunil Jain | BS | September 25, 2006 | 13:22 IST
Whether the country's populace was aware of the turnaround in the Indian Railways' fortunes under Lalu Prasad is an open question, but now thanks to the efforts of Prof. G Raghuram at the Indian Institute of Management, Ahmedabad, this is no longer in doubt.
After he prepared a case study on this, and invited Lalu to lecture students, newspapers across the country had pictures and stories of this, including Lalu's famous comparison of the Railways with his cow at home -- "if you don't milk it fully, it will get sick."
Sadly though, the case study by India's top management school is a lot less incisive than one would have hoped. While it details Lalu's contribution in terms of increasing the loading allowed in railway wagons, it ignores the major problems the railways face and blithely talks of how the sustainability of the turnaround depends on the political leadership -- and this, we've just been told, is to run the Railways the way Lalu has.
The study does not even look at Lalu's role in perspective -- as my colleague Subir Roy pointed out in?his column last week, the "operating ratio" (the share of revenue that's consumed by operating expenses), which had begun to improve since 2002-03, is still worse under Lalu than it was under CK Jaffer Sharief and Ram Vilas Paswan in the mid-90s.
Indeed, the larger study by Prof. Raghuram (the co-authored case study is a detailed analysis of a section of this) begins by talking of how, as compared to a planned investment of Rs 60,000 crore (Rs 600 billion) in the 10th Plan period (2002-07), the stupendous turnaround under Lalu has resulted in a situation where the Railways are now looking at investments of Rs 350,000 crore (Rs 3,500 billion) over the next eight years!
Well, what is one to make of the figures put out by Lalu himself in his budget -- after a stunning increase of 18 per cent in freight collections in 2005-06, Lalu is budgeting for a hike of just 10.7 per cent this year!
But perhaps I'm being too harsh. After all, the last of the suggested questions at the end of the case study is about whether what we've seen is really a turnaround and, if it is, how sustainable it is. That is, the good professor wants students to do some research themselves.
So what caused the turnaround? Is it sustainable? And, is the country paying a heavy price for this? What caused the turnaround is well-known. It was Lalu's decision to allow the Railway Board to increase the loading of wagons by around 10 tonne -- while perfectly safe, this 18 per cent hike in freight- carrying capacity is what really helped Lalu.
Had freight earnings in 2005-06 also risen by just the 11.4 per cent they rose in 2004-05, the operating ratio for 2005-06 would have been 86.8 per cent, as compared to the much-better 83.7 reported.
Interestingly, the IIM (A) study points out that, even with the higher freight earnings, had Lalu not shifted some expenditures to another head in the last budget, the operating ratio for 2005-06 would have been 86.6 per cent instead of 83.7 per cent. This means the reduction in the operating ratio under Nitish Kumar's tenure (from March 2001 to May 2004) is higher than the reduction during Lalu's first two years -- given that Lalu has projected a worsening of this ratio this year, the comparison isn't going to get any better!
Whether this is sustainable depends upon whether Lalu's cow can be milked any more. The reason why Lalu's back to a sober growth figure this year is that loading levels cannot be hiked anymore -- while it is true most railway tracks can take up to axle loads of 25 tonne, the Railways do not have wagons that are capable of this.
It's true other countries like the US even go up to 40-tonne axle loads, and have much lighter wagons (this allows a greater load to be put on the wagon while the axle load on the track remains the same), but getting to achieve this is a long-term thing since it means changing over 500,000-odd wagons owned by the Railways and strengthening the track.
What of the cost the country is paying for this turnaround? Since the Railways lose heavily on passenger traffic (the ratio of passenger tariff to freight tariff in India is 0.33 in comparison with 1.3 for China, 3.07 for Germany and 11.06 for the US), they make this up by overcharging on freight (on average, our rates are twice that of China, and productivity a third).
In the case of coal, for instance, the Railways charged Rs 13,134 crore (Rs 131.34 billion) as freight in 2004-05 on a total of Rs 30,660 crore (Rs 306.60 billion) of coal produced by Coal India, making this one of the most expensive forms of freight anywhere in the world.
Indeed, the IIM(A) paper brings out another interesting point, that while the Railways claim to have reduced freight rates, the rates for iron ore rose 55 per cent last year. Put another way, you could argue that if the Railways didn't overcharge on freight, Coal India would be a healthy company, and Indian coal would actually be economic to use.
If you're a monopolist and can hike tariffs at will, and the economy's growing fast enough to absorb the cost hike, the turnaround's hardly that stupendous anymore. Certainly not enough to get India's premier management institution so excited.
Lalu deserves only two cheers
Subir Roy | BS | September 20, 2006 | 11:35 IST
Subir Roy | BS | September 20, 2006 | 11:35 IST
The great railway turnaround is half a myth. None should grudge the Indian railways their day in the sun but it is necessary not to overdo the hype as that will inevitably lead to a downside later.
Also, it is necessary to direct praise where it is really due so as not to skew priorities. The great showman and master politician Lalu Prasad is basking in the glory of having done a stupendous turnaround job at the railways. The truth is that he has certainly turned things around but it would be wrong to imagine that the railways never did better.
The railways have been on an upward curve since 2002-03. The operating ratio, the share of revenue that is consumed by operating expenses (the lower it is the better), has been improving since then, but the current minister came in over a year later.
The same story is told by another key ratio, net revenue to capital-at-charge, which gives a measure of the return the goverment gets on its funds invested in the railways. As the same table shows, the really golden age of the Indian railways since reforms began (assuming that the pre- and post-reform periods are not comparable) was 1994-96.
Both the ratios were far better than they are now. The ministers in charge during the period were CK Jaffer Sharief and Ram Vilas Paswan. Who would like to claim that they provided the railways with the best leadership in the last 15 years?
The lesson should be clear. It doesn't matter who leads the railways; when the economy booms the railways boom. To be fair to Lalu Prasad, he has made a contribution. He has been particularly good in leading the current turnaround by putting capable officials in place and letting them run the show.
With results that are there for all to see. His master stroke has been to bring in an outsider, IAS officer Sudhir Kumar. He has been able to use the ministerial authority seen to be behind him to ram down throats reforms which have been long discussed within the railways but never initiated because of inter-departmental non-cooperation, the bane of the railways.
The foremost positive change, as is well-known, has been to allow every wagon to carry 6 tonnes more than 58 tonnes of freight (carrying capacity plus eight tonnes instead of the earlier two).
The railways are not really carrying more per wagon. With systematic overloading, they were carrying about the same but not charging for the excess carriage. This effective enhancement of capacity utilisation, accompanied by a lowering of freight rates and allowing volume discounts (this ante-dates Lalu Prasad), has particularly benefited bulk material handlers like the steel industry.
In the process "freight offerings" to the railways have improved dramatially, halting the long-term downward trend in the railways' share of national haulage, compared to what goes by road. Plus, of course, the booming economy has given an additional push.
It is necessary to avoid undue hype because that distracts attention. If your ear is too closely geared to the applause there will be a tendency to go in for glamorous new initiatives which will at best affect operations at the margin but divert attention from more basic but vital improvements waiting to happen for decades. Take the case of super-fast passenger corridors like Mumbai-Pune and Bangalore-Chennai, which are being actively considered.
Here is what the railways themselves said in their status paper published in 2002. "Such projects are highly cost-intensive?ricing and patronisation are interconnected but still [the] pricing of such services is expected to be quite high. [The] IR cannot fund such projects from its own sources.
Whether such projects should be taken up at all? Who should fund it? Should this passenger business be de-regulated?" Even if these issues have been satisfactorily sorted out, there should be no doubt that such projects will be only peripheral to the railways' main concerns.
The topmost concern for the railways remains safety. The accident record over the last few years has consistently improved but there remains an unfinished agenda. Another key agenda, which has been addressed far less, is timeliness.
Official statistics in this regard are meaningless and anecdotal evidence is contradictory. In a way, both the issues can be addressed by improving the work culture and following more strictly the laid- down procedures. Plus, the railways have to do something about cleanliness. Most railway stations and trains are filthy most of the time. This agenda has hardly been addressed.
My family and I boarded a Rajdhani Express for Kolkata from New Delhi station in July, which started over an hour late. We came on time and waited and sweated it out on a crowded filthy platform amidst overpowering stench.
And on the way to the platform we passed huge queues of passengers waiting and sweating it out to buy tickets from a railway which is plagued by ticketless travel. You need applause to perk you up but first things come first.
When IIM bachchas learnt all about Lalugiri
When a rustic man from one of India's most backward regions meets an elite class of Indian Institute of Management students, in the middle of India's most saffron and consumerist society, you may expect some disconnect between pastoral simplicity and corporate urbanity. But everyone was proven wrong, when Union Railway Minister Lalu Prasad -- that unbeatable and inimitable performer of the Indian political world -- taught a lesson or two to the bachchas of IIM, Ahmedabad.
Lalu's speech at the IIM-A was politically cautious and peppered with hilarity and unpretentious wisdom. He came forth as a highly alert minister, cunning enough to not take his role of a management guru at the IIM for granted.
(Also see: Lalu comes to IIM-A with new image)
He knew his facts well, showing he had done his homework, and was armed with all the details that he knew would be asked about his ministerial portfolio. He participated in the discussion over a study by IIM-A's Prof. G Raghuram on the Indian Railways' turnaround in the last two years with interest and intelligently kept his humour intact.
He regaled the Indian Institute of Management-Ahmedabad, but not once did he utter the name 'Indian Institute of Management.' He always referred to the nation's premier B-school as: "Bharatiya Prabandhan Sanstha."
Union Railway Minister Lalu Prasad and his wife Rabri Devi at the Indian Institute of Management, Ahmedabad, along with IIM-A director Bakul Dholakia, on Monday.
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