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Book Review

Bankruptcy to Billions – How the Indian Railways Transformed
Sudhir Kumar and Shagun Mehrotra
Oxford University Press ,New Delhi ,2009
Pages - 228
Price - Rs.495/-
Keshav Ram Singhal

‘Bankruptcy to Billions’ is a book that describes the four year remarkable journey of Indian Railways during 2004-08. Indian Railways is the world’s largest railway network having about 1.4 million employees and it was not able to pay dividend payments to its primary investor, Government of India in the financial year 2000-01. During this period the Indian Railways was overmanned and charging subsidized fares. In the following years after 2000-01 until 2004 nominal improvements were there, but the financial position of Indian Railways remained precarious. Transformation was seen thereafter. Without privatization, without retrenchment and without fare-hike, the financial position of Indian Railways and its quality of services improved during 2004-08.

Foreword of the book was written by Dr. Manmohan Singh, Prime Minister of India, who remarked that the book on the transformation of Indian Railways describes how progress is possible while benefitting rather than burdening the poor.

The book contains six chapters that try to understand associated aspects of the transformation. The first chapter ‘Bankruptcy to Billions’ provides summarized journey information of the transformation and focuses on the management strategy adopted by Indian Railways to have the transformation by implementing change. The book asserts that the distinct approach and its swift accomplishment made the transformation possible and restored the financial health of Indian Railways without burdening million of Indian travelers or railway employees. As a management strategy, we must have the courage to think out-of-the-box. We must have the courage to think anew, to question old beliefs, to seek new pathways. We must learn to walk in new directions and create new ways to Progress.

The second chapter of the book, ‘Political Economy of Reforms’ discusses Indian Railways, its structure and functioning, Evolution, Operational Crisis of the 1980s, Financial Crisis in 2001, Beyond Bankruptcy, Bit of a Contradiction, Earning Trust, Analyzing the Political Economy, Crafting the space for Reform, and Strategy. Having identified the space for reforms, without privatization, without retrenchment, and without fare hike, the Railway focused its strategy in such a way that the reformers designed ground rules for engagement in the political economy, including a media strategy.


The third chapter ‘The Market’ provides an analysis of specific business segments of the Railways by discussing Puzzling monopoly, Business portfolio, Freight, Passenger business, Miscellany, and Cost structures that offered opportunity to the Railways to optimize its functioning. It also gives message to its readers that a systematic approach is required to achieve operational synergy. It also reveals that the Railways can increase the profitability if it carries more volumes.

The fourth chapter ‘Milking the Cow’ discusses how the insights of coordinated approach were translated into profiting the Railways. It emphasized on a dynamic and differential pricing policy and a market-driven and customer centric response that is based on supply-side strategy.

Based on customer focus principle, the fifth chapter ‘Service with a Smile’ provides details of the demand-side strategy and it articulates the initiatives that led to market-oriented reforms in the freight, passenger, and other coaching segments. It also provides a message that as long as the Railways continue to innovate and add value that result in customer satisfaction, the transformation will continue.

The last chapter ‘Outcomes, Sustainability, and Replication’ summarizes some aspects of achievements of the Railways and also outlines a few striking lessons that continually need to be given importance.


The book is a well-written and explores the management strategy but at some places it boarders praise of the then Railway Administration. The book also provides additional information through Notes and Appendices. The book should be read by management students who are interested to know strategy, policy approaches and associated limitations in transforming a large state-owned organization like the Indian Railways.