Worst Situation Of Indian Railway In 10 Years – Free PDF Download

OPERATING RATIO IN INDIAN RAILWAYS

• The financial health of the railways is determined by its Operating Ratio (OR). Operating Ratio indicates how  much railway spends to earn a rupee.
• An Operating Ratio of 90% means that Railway is spending 90 paisa to earn 100 paisa (i.e. one rupee).
• Less operating ratio = healthy railway finances

THE PAST

• Historically, an Operating Ratio of Indian railway was not a problem in 1960s and 1970s.
• The best ever OR of Indian Railways was 7% in 1963-64.
• However, for the last few decades, this ratio is lingering between 92 to 98.5%.

THE NUMBERS

• The national auditor in its report on the railways’ finances, said that the railways would  have ended up with a negative balance of Rs 5,676.29 crore instead of a surplus of Rs 1,665.61 crore but for the advance  received from NTPC and IRCON.

UNDERSTANDING THE  FIGURES

• Exclusion of the advance by other PSUs would otherwise have increased the operating ratio to 66 per cent
• The national auditor in its report on the railways’ finances, said that the railways would have ended up  with a negative balance of Rs 5,676.29 crore  instead of a surplus of Rs 1,665.61 crore but for the  advance received from NTPC and IRCON.

GOVERNMENT’S DEFENCE

• Goyal said that Railway being a public service utility, invests a lot of money in the north-eastern, defence, and  backward regions, which may not always be financially  viable but need to be taken up nevertheless.
• The 7th pay commission itself has had an impact of over Rs 22,000 crore on the expenditure of the Railways  which is more than 10% of the total revenue that is  collected in the Railways, Goyal said.

ANOTHER CAUSE

• In the second quarter of the current fiscal, the national transporter saw a dip of Rs 155 crore and Rs 3,901  crore in passenger and freight fare earnings respectively  compared to the previous one.
• According to a reply to an RTI query filed

COUNTERING SLOWDOWN

• In a bid to counter the slowdown, Indian Railways has initiated a slew of measures. Recently, the national  transporter waived its “busy season” surcharge on  freight traffic, implemented a scheme offering a  concession to passengers of up to 25 per cent on trains  with AC chair car and executive class sitting. Also, it  launched initiatives to phase out 30-year-old diesel  engines, generate non-fare revenue, cut down on fuel  bills, as well as monetise its land holdings.

BAD TIMES AHEAD

• Once more PSUs get disinvested what will we do?
• How will railways be bailed out then?

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