Big setback for Indian Railways as expenditure outpaces earnings

With expenditure continuing to far exceed earnings, Indian Railways is facing a dismal financial scenario with the operating ratio breaching the 112-per cent mark. "The trend is unlikely to be reversed before March 2019 -- when the National Transporter expects heavy advance ticket bookings for the upcoming summer vacation, which could ease the pressure," Railway Ministry sources in the know told IANS.

Bookings for the summer vacation usually start in February-March as one can reserve tickets 120 days in advance. A substantial amount is also expected to start coming from non-fare revenue such as the station redevelopment project and advertisements, the sources added. The Railways` total earnings is way behind target -- it had earned Rs 1.15 lakh crore against the target of Rs 1.22 lakh crore at the end of November this year, a shortfall of Rs 7,840 crore, according to a financial review prepared by the Railways.

The ordinary working expenditure of the national transporter was Rs 1.03 lakh crore as against the budget projection of Rs 98,441 crore by November-end this fiscal. In passenger segment, it earned Rs 33,900 crore against the target of Rs 34,583 crore, a deficit of Rs 683 crore. Currently, the loss in the passenger business is hovering around Rs 30,000 crore.

As a result, the operating ratio is under stress and has touched 112.91 per cent mark, the data prepared by the Railways` financial wing reveals. This means that, in the April-November period, the national transporter spent Rs 112.91 to generate every Rs 100, which is reflective of a lower growth in traffic against the set target and heavy outgo on account of increased pension liability and working expenses.

The operating ratio is a gauge of operational efficiency that measures expenses as a proportion of revenue. Besides the working expenses, there are other expenditures -- including pension liability, expenditure of the Railway Board and railway institutions -- which has far exceeded the total incomes during April-November 2018, resulting in the higher operating ratio.

A higher ratio also indicates less ability to generate surplus funds that could be used for capital investments such as laying new lines and manufacturing more coaches.

The Railways has earmarked its highest ever capital expenditure of Rs 1.49 lakh crore for the current fiscal with the focus on capacity augmentation, electrification and overall infrastructure upgradation.