Railways’ Operating Ratio for 2017-18 at 98.44%, Worst in 10 Years

A measure of expenditure against revenue, the operating ratio shows how efficiently the railway is operating.

3 min read
 Image used for representational purposes. 

The Railways recorded an operating ratio of 98.44 per cent in 2017-18 which is the worst in the previous 10 years, the Comptroller and Auditor General (CAG) has said in a report tabled in Parliament on Monday, 2 December.

A measure of expenditure against revenue, the operating ratio shows how efficiently the railway is operating and how healthy are its finances. An operating ratio of 98.44 percent means that the Railways spent Rs 98.44 to earn Rs 100.

The Operating Ratio of the Indian Railways was 95.3 percent in 2009-10, 94.6 percent in 2010-11 and 94.9 percent in 2011-2012.

The national transporter’s worst performance in the last two decades was in 2000 2001 when its operating ratio was 98.3 percent. The following year, it improved to 96. The operating ratio of railways has been above 90 per cent over the six years before 2017-18.

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.

“The Indian Railways' operating ratio at 98.44 per cent in 2017-18 was the worst in the last 10 years,” the national auditor, Comptroller and Auditor General (CAG), said in the report.

“Exclusion of this advance would otherwise have increased the operating ratio to 102.66 percent,” the auditor said.

The Railways has also been unable to meet its operational cost of passenger services and other coaching services, it said, adding almost 95 percent of the profit from freight traffic was utilised to compensate for the loss on operation of passenger and other coaching services.

One of the contributing factors, it said, has been free and concessional fare tickets/ passes and Privilege Ticket Orders (PTOs) to various beneficiaries.

Review of the impact of concessions allowed to passengers revealed that 89.7 per cent of the revenue forgone towards concessions was on account of concession to senior citizens (52.5 percent) and Privilege Pass/PTO holders (37.2 percent).

“The response to Give Up’ scheme from the senior citizen passengers was not encouraging. The annual rate of growth in terms of number of passengers travelling in AC classes in all the categories of concessions was higher than that of the non-AC classes,” it said.

The initiative, started in 2017, encouraged senior citizens to give up their train fare concessions as part of the Railways' bid to increase revenues.

The report stated that during 2015-2016 to 2017-2018, a total of Rs 3894.32 crore was given as concession to 16.48 crore senior citizen passengers.

The number of such passengers had grown from 5.09 crore in 2015-2016 to 5.92 crore in 2017-2018 with the corresponding increase in the amount of concession from Rs 1194 crore to Rs 1411.23 crore, the report said.

It said that out of total 4.41 crore senior citizen passengers, 7.53 lakh (1.7 per cent) passengers opted to give up 50 percent concession and 10.9 lakh (2.47 per cent) passengers gave up 100 per cent concession.

The audit analysis of the finance accounts of the Railways revealed a declining trend of revenue surplus and the share of internal resources in capital expenditure, the report said.

The net revenue surplus decreased by 66.10 per cent from Rs 4,913.00 crore in 2016-17 to Rs 1,665.61 crore in 2017-18, according to the report.

The share of internal resources in total capital expenditure also decreased to 3.01 per cent in 2017-18.

“This had resulted in greater dependence on Gross Budgetary Support and Extra Budgetary Resources,” the CAG said.

The CAG also recommended that the railways need to take steps to augment their internal revenues, so that dependence on gross and extra budgetary resources is contained.

“Under provisioning for depreciation is resulting in piling up of 'throw forward' of works concerning renewal of over aged assets. There is an urgent need to address this backlog and ensure timely replacement and renewal of old assets,” it said.

It also advised the railways to avoid creating new funds without any “justifiable reason”.

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