In today’s electronic world, secured operation of the electric power system is one of the foremost requirements. Contingency analysis and management thus becomes the basic requirement of system analysis. In this paper, the contingency study has been done on a heavily loaded practical power system in an Indian scenario. A Composite Severity Index (CSI) has been proposed for the determination of critical line. The contingency analysis has been done using Rapid Contingency Ranking Technique (RCRT). By this method the number of lines on which the contingency analysis is to be performed is greatly reduced. Thereafter, an Interline Power Flow Controller (IPFC) has been placed in the system on the basis of CSI for improvement of the system situation post-contingency. An IPFC has been found to be very effective in the improvement of system condition of the heavily loaded Indian system.