Final Round: The Strategy Paradox

Indian railway had a humble beginning in the year 1853 with the inauguration of the railway
line between Mumbai & Thane. It soon became the backbone of the Indian economy by transporting
goods and passengers from one part of the country to the other. Initially, private companies
(British) operated the railway but after independence, the entire railway management came
under the control of the Central government.

Contribution to the Indian Economy

• Railways provide the cheapest and most convenient mode of passenger transport, both
for long-distance and suburban traffic.
• Railways have played a significant role in the development and growth of industries.
The growth of the textile industry in Mumbai, the jute industry around Kolkata, the
coal industry in Jharkhand, etc. is largely due to the development of railway networks.
• Railways help in supplying raw materials and other facilities to the factory sites and
finished goods to the market.
• Agriculture also owes its growth to railways to a great extent. Commercialization of
agriculture has been possible only by the contribution of the railway.

Indian Railway in the 21st century

• India has the fourth largest railway network in the world and tops the world’s leading
countries with respect to passenger/km earned.
• The railway is the largest public sector undertaking of the country comprising a vast
network of 6,906 stations spread over a route length of 63,122 km with a fleet of
7,681 locomotives, 39,852 passenger service vehicles, 4,904 other coaching vehicles,
and 2,14,760 wagons.
• Today, Indian Railways is operating in one of the most difficult terrains in the world,
for e.g., 55 km long rail route-length between Jammu and Udhampur.
• Indian railway is the largest government undertaking and the largest employer with
more than 10 lakh employees.

Recently, the Indian Railways initiated the process to allow private firms to operate passenger
trains on its network through 151 new trains. The privatization of Indian railways has been
recommended for many decades, by the erstwhile Planning Commission of India and now by
NITI Aayog. Liberalising the entry of new operators in the public transport that remains a
government monopoly, may be the path for improving services and facilitating the growth of
the sector. However, the idea of privatisation has its own merits and demerits.
The Privatisation Paradox:

The privatisation of the railway has many advantages like better service for customers,
improved efficiency, more revenue for the government, etc.

But at the same time, it has many disadvantages like increased fare, lack of reach to
marginalised areas, loss of employment, among other things.

The Problem Statement:

You are asked to analyse the privatisation of the Indian railway and suggest ways how the
government should go ahead with its plan. This should include the impact of macroeconomic
parameters on it. Your analysis may include, but should not be limited to the impact on:

1. Infrastructure development
2. Inflation, government revenue, and employment generation
3. Welfare and cross-subsidization
4. The overall efficiency of railways

You can totally accept or reject the privatisation based on your analysis or suggest how much
privatisation you are recommending (percent, routes, or the number of trains), based on your
research. You are also required to present the impact of this in 5 years, on the revenue and
employment generated.

The Ask:

• Participants are asked to make a presentation of a minimum of 6 slides and a

maximum of 10 slides (excluding the title and thank you slides).
• You will be given 8 minutes to present, with a grace period of 1 minute.
• This will be followed by a question-answer round of 5 minutes by the judges.
• You will be judged on the quality of analysis, clarity of solution, feasibility of the
idea, and the balance between profitability and welfare of the public.