I.

Introduction
The first railway train in India was introduced by British government which commenced
operation on 16th April, 1853 (Bombay to Thane -34 km). Early starting of railways network in
India was not as per social and economical needs of the country but it was meant to facilitate
military movement for defence of the sub-continent and for export of raw materials from India to
England to help British industry and earn profit. The other motive was to serve the interest of
British investors and the British industries. British investors were constructing many railway
lines in the British colonies and running industries. There by using its raw-materials and also
selling the finished product to colonies and thus earning handsome profits in the process.

After independent, the Indian railways functions do not solely for the economy factor but also for
India national integration.
It will cater to the needs of the people across geographies and income strata as well as ethnic,
religious and social diversities. It will better connect centre of commerce and industry, places of
pilgrimage, historical sites, and tourist attractions, as also ports to hinterland. Railways also
must reach the remote and underserved areas of the country to bring them into the national
mainstream of development1

Railways enterprise in India have had a varied history. Starting as a pure private enterprise under
government patronage, it entered into a phase of mixed enterprise, wherein both government and
private enterprise were in field, but the government exercised operational control over the private
enterprise also. Later as and when the contracts of the private companies terminated, the major
lines were purchased and leased for purposes of management to private companies, thus a
managing system emerged. From 1925 onwards, effort were made to introduce direct state
management of railways. Finally, after Independent with the integration of Indian states, the
railways owned and managed by the government of India and the Indian Railways became the
nations largest Public Enterprise.

The reason why the Indian railways is categorized into the largest organization or more
spectacular can be called mammoth organization, due to the data showed ;
Indian Railways (IR) is the third largest railway network in the world with 7,083 railway
stations, 1,31,205 railway bridges, 9000 locomotives, 51,030 passenger coaches, 2,19,931
freight cars and 63,974 route kilometers. Today IR operates 19,000 trains each day, comprising
12,000 passenger trains and 7,000 freight trains. It transports 2.65 million tonnes of freight
traffic and 23 million passengers every day and 7.2 billion passengers per year. It currently has

1
 1.36 million employees and an annual revenue base of Rs.1,06,000 crores as projected on
March 31,20122

Therefore, the discussion of India railways management becomes very interesting. I will discuss
the indian railways management by using a systems approach. This paper will further explain
about the basic concept of system theory, description Indian railways management consisting of
input (budget, regulation, human resources, infrastructure and assets), Transformation
(organizational structure, regulation of administration, Conduct And Establishment Rules,
Training), Output (Freight Operation, Passenger Business, Safety, Engineering Work,
Electrification, Signal and Telecom), Feedback (problem of human error in railways accident,
Outsourcing Problem), External Environment ( Economic Factor, and Environment Factor)

II. SYSTEM THEORY

Management theorists turned to biologists and other scientists to develop the idea of the
organization as a total system. With this ecological approach, a change in any one aspect of the
environment is believed to have an effect on the other components of the organization. The
specifics are analyzed, but always in the terms of the whole. The institution is considered an
entity that lives in specific environment and has essential parts that are interdependent.

General System theory as a concept was introduced and defined by Ludwig Von Bertalanffy, a
biologist, in 1951. His terminology is the foundation for the basic concepts of the general system
theory. Kenneth E. Boulding developed a hierarchy of system to help bridge the gap between
theoretical and empirical systems knowledge. He noted that the general system approach
furnished a framework or skeleton for all science but that each discipline, including management
science, must apply the model, add the flesh and blood of its own subject matter, and develop this
analytical model further. Included in Bouldings hierarchy of system is the concept of the open
system and the idea of the social organizations with role sets.3

One of management thinker well known in using systems management theory is Peter Sege. Peter
Senges 1990 book The Fifth Discipline that brought him firmly into the limelight and
popularized the concept of the learning organization. A great virtue of Peter Senges work is the
way in which he puts systems theory to work. The Fifth Discipline provides a good introduction

2
to the basics and uses of such theory and the way in which it can be brought together with other
theoretical devices in order to make sense of organizational questions and issues. Systemic
thinking is the conceptual cornerstone (The Fifth Discipline) of his approach. It is the discipline
that integrates the others, fusing them into a coherent body of theory and practice . Systems
theorys ability to comprehend and address the whole, and to examine the interrelationship
between the parts provides, for Peter Senge, both the incentive and the means to integrate the
disciplines. It is necessary to highlight one or two elements of his argument :
First, while the basic tools of systems theory are fairly straightforward they can build into
sophisticated models. Peter Senge argues that one of the key problems with much that is written
about, and done in the name of management, is that rather simplistic frameworks are applied to
what are complex systems. We tend to focus on the parts rather than seeing the whole, and to fail
to see organization as a dynamic process. Thus, the argument runs, a better appreciation of
systems will lead to more appropriate action.4
Second, The systems viewpoint is generally oriented toward the long term view. Thats why
delays and feedback loops are so important. In the short term, you can often ignore them; theyre
inconsequential. They only come back to haunt you in the long term.5

II.1. BASIC CONCEPT OF SYSTEM THEORY

A system may be defined as an assemblage or combination of things or parts forming a complex
or unitary whole, a set of interacting units. The essential focus of the system theory is the
relationship and interdependence of the parts. The systems theory moves beyond structure or
function (e.g. organization chart, departmentation) to emphasize the flow of information, the
work, the inputs and the outputs, Systems had horizontal relationships to vertical relationships
contained in traditional organizational theory.

The system model is made up of four basic components6: (1) inputs, (2) processes (3)outputs (4)
feedback and another one is external environment (Figure 1)

3
 Figure 1 : The flows and feedback in open system7

EXTERNAL
ENVIRONMENT

INPUT (RESOURCES)
Human resources
Capital OUTPUT
TRANSFORMATION
Land GOODS
OR
Equipment CONVERSION PROCESS SERVICES
Building OTHER
Technology
Information

FEEDBACK

1. INPUTS
Input are elements the system must accept because they are imposed by outsides forces. The
many constrains on organizational processes, such as government regulation and economic
factors, are typical inputs imposed by outside groups. Certain input are needed in order to
achieve the organizational goals; for example : the inputs often are the raw materials that are
processed to produce some object or service. The concept of inputs may be expanded to include
the demands made on the system, such as deadlines, priorities, or conflicting pressures. Goodwill
toward the organization, general support, or the lack of these also may be included as inputs.

2. OUTPUTS
Outputs are the goods and services that the organization (or subdivision or unit) must produce.
These outputs may be routine, frequent, predictable, and some what easy to identify. The stated

4
purpose of the organization usually contains information on its basic, obvious output. For
example : a hospital offers patient care, a supermarket sells goods, a factory produces goods, and
a railways supplies transportation. Managers control routine and predictable outputs through
proper planning.
Other necessary output are infrequent but predictable. By careful analysis of organizational data
over a relativity long time period, these infrequent outputs can usually be identified. Proper
planning through identification and anticipation of such special periodic demands on the systems
leads to great control and, consequently, stability.
Most managers face a third category: the non predictable outputs for which they can and must
plan. Certain demands on the system are made with sufficient regularity that, although the exact
number and time cannot be calculated, estimates can be made. This is an essential aspect of
proper planning and controlling.
Some outputs are unexpected, such as those that become necessary because of natural disasters
or sudden economic chaos.Even in this instances, managers can anticipate and plan for
Armageddon in any of symbolic or real forms.

3. TRANSFORMATIONS
Transformations are the structures or processes by which inputs are converted to outputs.
Physical plan, work flow, methods and procedurs, and hours of work are including in
transformations.
Managers may be severely limited in their ability to control inputs, but the processes, structures,
organizational patterns, and procedures, that constitute the transformations are normally areas of
management prerogative.

4. FEEDBACK
Changes in input mix must be anticipated, In order to respond to these changes, managers need
feedback on the acceptability, and adequacy, of the outputs. It is through the feedback process
that inputs and even transformation are adjusted to produce new outputs. The communication
network and control processes are the usual sources of organized feedback. Routine, orderly
feedback is provided by such activities as market research, and forecasting inbusiness
organizations, client surveys in service organizations, periodic accreditation surveys, periodic

5
employee evaluations in work groups, and periodic testing and grading in an educational system.
The management by objectives process, short interval scheduling, and program evaluation
review technique (PERT) networks constitute specific management tools of planning and
controlling that include structured, factual feedback.
If the communication process is not sufficiently developed to permit safe and acceptable avenues
for feedback, a certain amount of feedback will occur spontaneously. In this case, the feedback
tends to take a negative form, such as a client outburst of anger, a precipitous lawsuit, a riot, a
wildcat strike, a consumer boycott, or an epidemic.

5. EXTERNAL ENVIRONMENT
External environment, defined as all elements outside an organization that are relevant to its
operations. The external environment has both direction-action and indirect-action elements.
Direct-action environment is individuals or groups that are directly or indirectly affected by an
organizations pursuit of its goals. It is also called stakeholders which is divided into two
categories: External stakeholders include such as: groups as unions, suppliers, competitors,
customers, and special-interest groups. Internal stakeholders include employees, shareholders
and the board of directors. Managers may have more influence with internal stake-holders than
external ones. On the other hand, internal stakeholders are organization members, while external
stakeholders not. Indirect-action environment component of the external environment affects
organizations in two ways. First, forces may dictate the formation of a group that eventually
becomes a stakeholder. Second, indirect-action elements create a climate in which the
organization exists and to which it may ultimately have to respond. Indirect-action environment
consist of social variables, economic variables, political variables and technological variabels

6
III. DESCRIPTION OF INDIAN RAILWAYS MANAGEMENT
III.1. INPUT
1. BUDGET
The Indian railway (IR) is an Indian state-owned enterprise, owned and operated by
the government of India through the Ministry of Railways and managed by a railway board. Due
to government budget is an important part of Indian railways system. An overview of India
railways budget at this time can be seen on the India Eleven Five Year Plan.
Table 1.Plan-head wise Summary of Plan Outlay8

No. Plan Head X Plan Percent XI Plan Percent

(Rs in cr) (Rs in cr)
1. New Lines 9202 10,86% 16000 6,37%
2. Gauge Conversion 6240 7,37% 18700 7,45%
3. Doubling 3461 4,08% 19000 7,57%
4. Traffic Facilities-Yard Remod 1623 1,92% 7500 2,99%
5. Computerisation 608 0,72% 5200 2.07%
6. Railway Research 71 0,08% 425 0,17%
7. Rolling Stock 26807 31,65% 59475 23,70%
8. Road Safety-level crossing 641 0,76% 1000 0,40%
9. Road Safety-Rob/Rub 863 1,02% 11000 4,38%
10. Track Renewals 15363 18,14% 23165 9,59%
11. Bridge Works 1740 2,05% 2895 1,15%
12. Signalling & Telecom Works 4447 5,25% 12000 4,78%
13. Electrification Projects 810 0,96% 3500 1,39%
14. Other Electrical Works 787 0,93% 3460 1,38%
15. Machinery & Plant 827 0,98% 2200 0,88%
16. Workshops 1262 1,49% 10100 4,02%
17. Staff Quarters 324 0,38% 1085 0,43%
18, Amenities for staff 416 0,49% 1455 0,58%
19. Passenger & Other users amenities 1235 1,46% 3500 1,39%
20. Investment in PSUs 3723 4,39% 41000 16,34%
21. Other Specified works 766 0,90% 1000 0,40%
22. M.T.P 1450 1,71% 4750 1,89%
23. Inventories 2041 2,41% 2590 1,02%
TOTAL 84708 100.00% 251000 100.00%

7
The table above shows the planning priorities Indian railways on Eleventh five years trying to
improve not only rolling stock (locomotives, wagons, containers and carriages) but also
investment in public Sector undertaking such as Indian Railways Catering and Tourism
Corporation, Indian Railway Finance Corporation, and Rail Vikas Nigam Limited. Financing for
those program will be obtained from Gross Budgetary Support , Internal Resources and Extra
Budgetary Resources (market borrowing through Indian Railway Finance Corporation, Foreign
Aids or Public Private Partnership).

2. HUMAN RESOURCES
Indian Railways is one of the largest employer in the world with 1.54 million employees and the
second largest employer in India after Indian Armed Forces with 1.9 million employees9 .
Railway employees are working in various categories in the Zonal Railways and Productions
Units. There are around 700 categories of staff divided into four Groups viz. Group A, B, C & D
assigned according to working responsibilities. Group 'A' and 'B') are gazetted and Group 'C'
and 'D' non-gazetted employees The manpower is mainly distributed in Open line &
Construction Wings having Engineering, Signal & Telecommunication, Electrical,
Administration, Accounts and Stores departments. Open line in addition has staff working in the
Transportation, Mechanical, Commercial, Medical and Security departments. The recruitment of
Group 'A' gazetted employees is carried out by the Union Public Service Commission through
exams conducted by it.[13] The recruitment to Group 'C' and 'D' employees on the Indian
Railways is done through 20 Railway Recruitment Boards which are controlled by the Railway
Recruitment Control Board (RRCB).The training of all cadres is entrusted and shared between
six centralized training institutes.

3. INFRASTRUCTURE AND ASSETS

Indian Railways (IR) is the third largest railway network in the world with 7,083 railway
stations, 1,31,205 railway bridges, 9000 locomotives, 51,030 passenger coaches, 2,19,931 freight
cars and 700 Repair Shops, 2300 Good Sheds ,63,974 route kilometer and 108,706 track
kilometer.

8
III.2. TRANSFORMATION
1. ORGANISATIONAL STRUCTURE
The present set up of Indian Railways has three tiers (Railway Board/Zones/Divisions) based on
the concept of geographical boundaries for the Zones and Divisions. At the top level is the
Railway Board working under the Minister for railways assisted by two ministers of state. The
Railway Board consist of Chairman Railway Board and six member: Member Electrical,
Member Staff, Member Engineering, Member Mechanical, Member Traffic and the Financial
Commissioner. There are seventeenth Zonal Railways headed by General Managers also
production Units and other Units reporting to the Railway Board. The Indian Railways also has
several Public Sector Undertakings (PSUs) under it.

2. REGULATION OF ADMINISTRATION
Policy which regulates the administration of Indian Railways is The Railways Act 1989. The act
regarding with zonal railways, appointment of general manager, appointment and duty of
commissioners of railway safety, construction and maintenance work. Furthermore, this act also
consist of the central government power to fix rates for the carriage of passengers and goods,
rates for the whole or any part of the railway and different rates may be fixed for different classes
of goods and specify in such order the conditions subject to which such rates shall apply.

3. CONDUCT AND ESTABLISHMENT RULES

Two sets rules are designed to regulate conduct and discipline of employer in Indian Railways.
One set is called the Railway Services (Conduct) Rules , 1966 and the other set the Railway
Servant Discipline an Appeal Rules, 1968. Those rules are separated from civil service (conduct)
rules because of such reasons : First, the Railway services are independent of the All India and
Central Services, Second, the railway working is different from the general working of the other
Ministries and Department of government of India.
The rules governing general conditions of service applicable to Railway servant is covered in
Indian Railway Establishment Code. The code is issued in two volumes. The first volume
embodies all rules governing the service conditions of Railway servants, while the second
volume contains Rules which correspond to the Fundamental Rules, the Supplementary Rules

9
and the Pension Rules in the civil Service Regulations, which are applicable to the civil servants
under the Government of India.

4. TRAINING

Indian Railways has a total of 291 Training centers located on the length and breadth of the
country. The following are examples of some centre training institutes such as Institutes are10:
Indian Railway Institute of Transportation Management, Lucknow for officers of the Traffic
department Indian Railway Institute of Civil Engineering, Pune for civil engineers, Indian
Railway Institute of Signal and Telecommunications Engineering, Secunderabad for engineers of
S&T department, Indian Railway Institute of Mechanical and Electrical Engineering & Jamalpur
Gymkhana, Jamalpur for mechanical engineers Indian Railway Institute of Electrical
Engineering, Nasik for Electrical Engineers, RPF Academy, Lucknow for officers of the Railway
Protection Force and Railway Staff College, Vadodara functions as the apex training institute for
the officers of all departments in general and Accounts, Personnel, Stores and Medical
departments in particular. Centralized Training Academy of Railways
Accounts, Secunderabad functions as Financial and Managerial Training and Research Academy
for Accounts Department in particular.

III.3 OUTPUT
1. FREIGHT OPERATION
The originating revenue loading was 921.73 million tonnes excluding loading of Konkan
Railway in 2010-11 compared to 887.79 million tonnes in the previous year. The transport output
in terms of revenue net tonnes km. Net tone km was 625.72 billion in 2010-11 compared to
600.55 billion in 2009-10. Earnings from freight traffic (excluding miscellaneous goods
earnings) was 60,687.05 crore up by `3,775.54 crore (6.63%) from the previous year.

2. PASSENGER BUSINESS
During 2010-11, the number of passengers carried was 7,651 million compared to 7,246 million
in 2009-10 thus registering an increase of 5.59%. Passenger km. which is the product of the
number of passengers carried and average distance traversed was 978 billion, up by 8.31% from

10
903 billion in the previous year. Passenger earnings increased by `2,291.2 crore (9.78%)
compared to 2009-10.

3. ENGINEERING WORKS
During the year, 709 km. of new lines were constructed and 837 km. of track was converted to
Broad Gauge. 3,465 km. of track renewal was carried out in 2010-11 as against 3,840 km. in the
previous year.
4. ELECTRIFICATION
975 km. of Indian Railways route was electrified during 2010-11.

5. SAFETY, SIGNAL AND TELECOM

There were 139 consequential train accidents during 2010-11 compared to 165 during 2009-10.
Train accidents per million train km. on Indian Railway came down from 0.17 in 2009-10 to 0.14
in 2010-11. As a step towards improving passenger amenities, Public Address System at 3,865
stations, Train Display Boards at 1,090 stations and Coach Guidance Boards at 480 stations.

III.4 FEEDBACK
1. PROBLEM OF HUMAN ERROR IN RAILWAYS ACCIDENT
Most of railways accident due to human error. There are several reasons why it happened. First,
Excessive Working hours. For example :The loco pilots are almost always over worked.
Although they have to put in only eight our of work, loco pilots do 12-14 hours and continuous
night duty on a constant basis11.Second, Lack of staff. Rakesh Mohan Committee recommended
privatisation of 19 processes in Indian Railway. Along with that , it recommended, a freeze in
recruitment and simultaneously a reduction in the employee strength in four phases. The staff
strength is in continuous decline. In 1974, the total staff strength was around 20 lakh, which
went down to 16.25 in 1985. At the present, the total permanent personnel number is 13,62 lakh.
This, despite the fact that the number of trains has increased nearly fourfold since 1991. The
speed of trains has also doubled in the past two decades.

11
2. OUTSOURCING PROBLEMS
Its two-tier outsourcing system. One is the outsourcing of all types of factory production and the
other is the outsourcing services. Outsourcing is the biggest cause of corruption in the Railways.
Because of it, the administrator-contractor nexus has become stronger than ever. The contractors
are driven by considerations of profit rather than quality. The employees, on the other hand, are
getting paid much less than what they should get. For instance, a trackman was paid Rs. 15. 000
to Rs. 20.000 to manage the traffic on tracks. But after it was privatized the contractors pay their
trackmen not more than Rs 5.000 each.12 This has led to great tension between workers and
contractors.

III.5 EXTERNAL ENVIRONMENT

1. DIRECT ACTION ENVIRONMENT
Public- Private-Partnership (PPP)
Indian Railways had made several attempts to rope in private participation in areas such as
catering, wagon ownership and leasing and joint ventures for rail infrastructure projects.
These efforts were, however, limited in scale and scope. The current strategy is to leverage
private capital through PPPs to the maximum extent in areas which are amenable to PPPs to
improve efficiencies and control costs.

INDIAN RAILWAY TRADE UNION

Trade union history of Indian Railways is as old as the labour movement in India. The trade
union movement in India had been the child of industrial development. Chapters XXV of
Indian Railway Establishment Manual lays down the following conditions for recognition of
the Unions.13

The Unions must be registered under Indian Trade Union Act 1926.
o It must consist of a distinct class of Railways Employees and must not be formed on the
basis of any caste, tribe or religion.
o All Railway Employees of the same class must be eligible for membership. It should not be
sectional.
It's membership should not be less than 30% of the total number of non-gazetted staff
employed on the Railway concerned.
It should not engage in subversive activities.
12
2. INDIRECT ACTION ENVIRONMENT
ECONOMIC FACTOR
Performance of IR is closely tied to the overall macro-economic environment and growth
of GDP in the country. Goldman Sachs in their research paper (Global Economics
Paper:99,2003) had predicted that with a steady rate of annual GDP growth at 5-6% Indian
GDP will overtake that of France and Italy by 2020 and would be well on course to
overtake that of U.K. and Germany by 2025 making it the fourth largest economy of the
world. Given that Indian economy has been growing at a rate close to 8% in the last six
years, the prediction may be realized sooner. There is a great deal of confidence and
optimism that the Indian economy would continue to grow at 8% or more for several years
ahead. At this rate, by 2020 the per capita income would more than double from the US$
2972 (in PPP terms) in 2008-09. Simultaneously, the proportion of the population living in
urban areas is set to increase from 27.8% in 2001 to around 41% by 2030 (India: Urban
Poverty Report, 2009, Government of India and UNDP). Industrial sector's share as a
percentage of GDP will also grow in line with increasing global integration, rising
prosperity and sophistication of the Indian industry. As per Government of India's trade
policy, India's share in international trade is targeted to rise from the present level 1.5% to
5% by 2020. Quality of infrastructure will be a key determinant in the realization of these
projections. Therefore, investment on infrastructure is likely to witness a major step-up. All
these macro-economic developments would have a positive impact on the growth of travel
and transport in general and railway transport in particular.

ENVIRONMENT FACTOR
Environmental issues greatly affect the course of indian railways. It can be seen in Indian
Railway Vision 2020
Vision 2020 also addresses another major development challenge, which is both national
and global in nature, namely, reducing hazardous carbon emissions that have triggered
climate change. So far, there has been inadequate recognition of the Railways'
contribution towards India's climate protection efforts. Railways are more energy-efficient
and less polluting than other modes of transport. It uses less land than the road sector14

13
IV. CONCLUSION

The results we have obtained from the description clearly indicate that Indian Railway has
witnessed rising trend of performance. At this juncture, the question that arises is how to make
the processes and strategies sustainable in order to have a consistent performance of the IR?
Most essentially, the Indian Railways, to further enhance its performance, should strive towards
the completion of dedicated freight corridor, along the golden quadrilateral. This corridor will
allow the railways to overcome stiff competition from roadways and bring back some of the
important commodities back to railways. However, the challenge in this respect is the speedy
completion of the dedicated freight corridor.
Indian Railways contribution to the national goal of achieving double digit GDP growth rate on
sustainable basis It will accelerate economic growth, open up new avenues for employment in
the primary, secondary and tertiary sectors and also promote geographically and socially
balanced growth.

NOTES
1
Ministry of railways, Indian Railways Vision 2020, 28 October 2012,2009,p.i
http://www.indianrailways.gov.in/railwayboard/uploads/directorate/planning/downloads/vision_202blue
_050411.pdf
2
Ministry of railways, Report of the expert group for modernization of Indian Railways,25 October 2012, 2012,p.1
www.indianrailways.gov.in/railwayboard/.../Main_Report_Vol_I.pdf
3
Kenneth E. Boulding, General Systems Theory : The Skeleton of science, Management Science 2 (1956) : 197-
208
4
Peter M.Senge, The Fifth Dicipline : The Art and The Practice of The Learning Organization. Newyork,
Doubleday, 1990,p:23
5
Ibid., p. 27
6
James A.F.Stoner, Management (Sixth Edition),United Kingdom. Pearson Education, 2005 p: 47
7
Ibid., p.48
8
Government of IndiaMinistry of Railways, Report of the Working Group on Railway Programmes for the Eleventh
Five Year Plan (2007-20012),25October 2012 p.114
http://planningcommission.nic.in/aboutus/committee/wrkgrp11/wg11_railway.pdf
9
Wikipedia, List of largest employers, 02 November 2012
http://en.wikipedia.org/wiki/List_of_largest_employers
10
Wikipedia, Centralised Training Institutes of the Indian Railways, 12 October 2012
http://en.wikipedia.org/wiki/Centralised_Training_Institutes_of_the_Indian_Railways
11
Frontline, Ailing Behemoth, Volume 29 Number 18 September 8-12,2012,p. 114
12
Ibid., p. 115
13
Indian Railway Establishment Manual , Chapter XXV. 12 October 2012
http://indianrailwayemployee.com/content/indian-railways-establishment-manual-irem
14
Indian Railways Vision 2020, op.cit., p. ii

14
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