The Indian Railways’ this year’s Operating Ratio (OR) (calculation of paisa spent against a rupee earned) has touched an all-time high of 96.96%, implying that the state carrier’s expenses for the period increased exponentially.
The OR indicates that during the 2016-17 fiscal, the Railways spent 96.96 paisa for every rupee that it earned. In the last 24 years, the state-owned transporter logged its best performance in 2007-08, recording an OR of 75.9%. The previous highest OR of 95.3% - was registered in 2009-10.
While the mounting OR is a matter of concern, officials say performance should not be judged on parameters designed around “profitability”. Centre’s big infrastructure push, economic slowdown and the obligation to meet 7th Pay Commission’s commitments have led to Railway’s hiked costs.
Financial health of the Indian Railways has been adversely impacted this year on account of the payouts of Rs 32,000 crore that it was required to make towards meeting the commitments of the 7th Pay Commission.
The NDA government’s big infrastructure push – with bigger investments in new line/doubling/tripling projects – has also negatively impacted the Railway’s finances, as these will take time to get commissioned or to start yielding profits.
Further, economic slowdown has caused a dip in freight transportation revenues, with losses to the tune of Rs 4899 crore recorded in 2016-17 – a decline of minus 4% over last year’s figures. During the year, passenger earnings increased by Rs 1996 crore which was a mere 5% growth as compared to last year.