"If you do not milk the cow fully, it falls sick"-Lalu Prasads words of wisdom at IIM-A

When Yadav took over, the Indian Railways was a loss-making organization. The Rakesh Mohan Committee (headed by Rakesh Mohan, secretary, department of economic affairs) had termed it a 'white elephant' and predicted that it was destined to hit Rs 61,000 crore (Rs 610 billion) in bankruptcy by 2015. The only solution seemed to be privatization.

Defying all these predictions, the Railways booked a surplus of 110 billion rupees (U$2.47 billion). Lalu Prasad Yadav is now credited with engineering the financial turnaround of Indian Railways, that was on the verge of bankruptcy before his appointment to the office. What makes his performance commendable is that he has left passenger fares untouched and has found several other profitable sources of revenue for the Railways. he improved on his first year's performance by stating a profit of 14000 crores with decreased freight and unchanged passenger fares in 2006..then in 2007 budget, he increased the profit level to 20000 crores with introduction of cushion seats in all unreserved compartments

He announced this turnaround during his Budget-Speech-06-07 in these words:

“ Sir, I take pride in informing this House that in the first nine months of the year 2005-06, the Railways’ output has been record breaking. The growth in freight loading is 10% and in freight revenues it is over 18%. Based on the trends up to now, the freight loading target is being increased from 635 mt to 668 mt and the goods revenues target from Rs. 33,480 cr to Rs. 36,490 cr. Thus, Railways would achieve incremental freight loading of 111 mt in two years itself, which will be 133% higher as compared to the incremental loading of 83 mt of entire Ninth Five Year Plan period. Tenth Plan targets of 624 mt loading and 396 billion tonne kilometers have been surpassed one year in advance. Sir, I not only hope but firmly believe that we would surpass the Tenth Five Year Plan’s incremental target of 63 billion tkm for freight business by over 200%. ). ”

World-famous Business Schools were amazed of the turnaround and they were keen to know how he did it. He addressed over a 100 students from Harvard, Wharton and others in Bojpuri Hindi. He has recieved invitations from 8 Ivy League Schools

The turnaround of the Indian Railways is now being studied by the students of the Indian Institute of Management Ahmedabad.Prof G. Raghuram, a faculty member, IIM-A , has already conducted a detailed study on the Railways turnaround.

So what has Prasad done to the Indian Railways which his predecessors could not? The answer lies in his own down-to-earth attitude and rustic wisdom.
Prasad puts it in his inimitable style: “My mother always told me not to handle a buffalo by its tail, but always catch it by its horns. And I have used that lesson in everything in my life, including the Railways.”
When some of the Railway Board members expressed apprehensions in increasing wagon loads, a decision which alone generated Rs 7,200 crore (Rs 72 billion), Prasad said: “Wagon is the bread-earning horse of the Railways. Load it adequately. Make it run and don’t stable it.”
Prasad’s other management mantra for the Railways has been: “If you do not milk the cow fully, it falls sick,” which he is practicing while running the Railways.

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