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Indian Railways operating ratio to cross 100 due to pay panel payout
 

the finance ministry expressing its inability to fund the railways expenditure on the Seventh Pay Commission, the transporters operating ratio operating expenses as a proportion of revenues is likely to exceed 100 in FY17. In one stroke, that wipes out the gains made by the railways in FY16, and leaves its finances looking quite precarious, much like they did after the Sixth Pay Commission.



 

Thanks to a sluggish economy, revenue growth in FY16, in any case, is going to be much lower than the budgeted 15%. Till December, the railways only generated Rs 75,222 crore of freight versus its internal target of Rs 81,073 crore. On the passenger front, it managed to generate Rs 26,031 crore up to October, 10% below its internal target of Rs 29,016 crore. Given the best months for freight traffic are December and January, the ministry is looking at a 9-10% growth for the year, taking the likely revenue to around R1.74 lakh crore compared to the budgeted R1.84 lakh crore.

 

What will help, though, is the sharp slowing in expenses this year, mostly due to the fall in prices of diesel as well as the new power purchase agreements that the railways has entered into to replace existing ones. Compared to an 11% growth budgeted for in FY16, railway ministry sources are confident growth in expenses can be contained at around 4-5%. In which case, the operating ratio for FY16 may not be very different from that budgeted for.


The railways real challenge will come in FY17. While the diesel bonanza is near and end, more power purchase agreements are expected to lower fuel costs. While railway minister Suresh Prabhu has asked the Railway Board to look at efficiency gains that could keep growth in FY17 expenses flat, or very low, even this will not be enough. Even if other expenses remain flat a very big assumption the railways will have to spend an additional Rs 40,000 crore due to the pay commission in FY17, after taking into account the arrears from January to March 2016.

 

If zero growth in expenses apart from those relating to the pay panel is assumed for FY17, that still takes the railways operating expenses for the year to Rs 1.94 lakh crore.

 

Given a revenue growth in FY17 that is similar to that in FY16, the railways will earn Rs 1.89 lakh crore and has to finance expenses worth Rs 1.94 lakh crore an operating ratio of over 100%.

If the railway minister Prabhu is able to get the Railways Regulatory Authority Bill through and set up a regulator in time, he could try and get the finance ministry to foot some of the Rs 30,000 crore he spends each year on subsidies in the passenger segment.

 

Getting more non-fare revenue from advertising, for instance is another priority area for the railways, though the progress on this has been slow.

 

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Voith and Liebherr In Rail Partnership
Pleasant Friday morning in Delhi, 10 trains cancelled
कटिहार और जलंधर के बीच साप्ताहिक विशेष ट्रेन आठ फेरों में
इंदौर-कामाख्या ट्रेन शुरू
गोरखपुर से देवघर के बीच मेला विशेष ट्रेन चलाने का निर्णय
जनता एक्सप्रेस ट्रेन में मिला एक अज्ञात व्यक्ति का शव
श्रावणी मेला के मौके पर पटना-आसनसोल के बीच चलेंगी स्पेशल ट्रेन
गोरखपुर सुपरफास्ट विशेष ट्रेन का संचलन 04 फेरों में करने का निर्णय
Wi-Fi facility launched at 28 stations on Konkan railway
रेल मंत्री ने तेजस ट्रेन के रेक का निरीक्षण किया
कृषक एक्सप्रेस में अतिरिक्त कोच लगेंगे
समता एक्सप्रेस की पार्सल बोगी काटकर लाखों की चोरी
Indian Railway to lay 7 km tracks per day in 2016-17
Indian Railways to set up consultative committees to improve efficiency
India to Supply Diesel Locomotive to Myanmar Railways Indian Railways PSU RITES signs Locomotives Export Contract
Expectations high as Prabhu presents his second rail budget
Three coaches of Awadh-Assam Express jump rail in Bihar
Indian Railways operating ratio to cross 100 due to pay panel payout
Indian Railways hikes Tatkal ticket charges; to be applied starting Dec 25
Ghaziabad found new overhead crane and new tower wagon shed