Like many Indians I was stupefied to read that the railways plan to bottle water. In that case, I thought, why don't they also grow tea (and wheat and rice) for their catering department? And cotton for their conductor's uniforms, and make shoes for the drivers while they are at it? Perhaps then we can get someone to run the trains safely. The issue is not bottled water but the astounding mindset of the railway board that is ignorant of the basic managerial concept of “core competence” and thinks that the railways with its inefficient, high cost labour can do it cheaper. The purpose of the Indian Railways is not to serve India's citizens but to tend to the comforts of its 15 lakh railway employees. This is seven times more manpower per kilometre than in the developed countries. The railways admit that five lakhs employees are surplus-that is, one out of three persons should not be there. Railway families occupy on the average train 40 out of 100 berths in the two-tier (AC) sleeper class, and they (and their relatives and friends and friends of friends) get priority in bookings because of “connections”, and this explains why you and I cannot get a berth. Staff accounts for 50 per cent of total railway costs with productivity that is amongst the lowest in the world. Because of rising payroll costs, expenses on repairs and maintenance have been steadily declining, while employee negligence (called “human error”) is the main cause of accidents. When a serious accident occurs, the site managers are typically found tending to the visiting ministers and board members, while accident victims are left to fend for themselves. When the Rajdhani derailed on the Tundla-Kanpur section in January 1992 the chief area manager of Kanpur was transferred because he was aiding the injured passengers and not looking after the chairman of the Railway Board. There was a time when railway journeys were filled with pleasure. Now, filth on the tracks at the premier New Delhi station puts off every decent citizen, and the first 20 km of the journey are a sanitation disgrace. It is easy to blame the filthy habits of our people, but couldn't some of the five-lakh surplus employees be deployed to clean it up? When questioned the railway authorities frankly admit that the low caste safaiwallas mark attendance and for the rest of the day pursue their real profession, which is to play in marriage bands. These examples are symptoms of a bigger disease that has infected the railways management and it is destroying a great institution that will soon be 150 years old. The railwaymen blame the politicians, and to some extent they are right. Among its chief destroyers have been three ministers in the past twenty years whose names are well known. But we now have a good minister, Nitish Kumar, whose budget has finally reversed a pernicious ten-year trend (wherein freight subsidised passengers), but does he have the will to do the surgery? It is easy to blame politicians, but the real problem is in the managerial culture and systems of the railways. It begins with a Railway Board that centralises decisions, which should be taken at the operating level. Board members are mediocrities who have come up through a perverse seniority system. When they reach the board level they have only a few months left; they see it as a reward, enjoy a few foreign trips, and retire happily without upsetting the status quo. The downslide began in the late eighties when the chairman reduced the tenure of the fulcrum of system-the Divisional Railway Manager (DRM) to two years in the interest of “giving everyone a chance.” The railways have ten officer cadres and officers place loyalty to their cadre above the good of the system. Only when officers have sufficient tenure as division and general managers are they able to shed their departmental bias. Thus, the DRM is the grooming ground for preparing future leaders, and this single bad decision cut this short and reinforced the disease of “departmentalism”. Yet, the situation is not hopeless for the railways can be turned around. This happened between 1980 and 1982, when a good CEO, M.S. Gujral, came in and stemmed the rot. The railways had declined so badly in the 1970s that power plants used to shut down because railways failed to deliver them coal. He transformed the institution so dramatically that India enjoyed the fruits of his labours through the eighties. Fortunately, we now have an excellent blueprint for reviving this great institution in Rakesh Mohan Committee's report. It raises many issues, and in my next column I shall write about how to reinvent the railways and create a vibrant, outward looking, commercial institution with a customer focus.