Railway minister Mamata Banerjee has significantly lowered the ambitious revenue and expenditure targets for 2009-10 set by her predecessor Lalu Prasad Yadav when he presented the interim Rail Budget in February 2009. When compared to the 2008-09 revised estimates, however, the Rail Budget 2009-10 tabled in Parliament on Friday projects an improvement in the railways’ balance sheet.

The net railway revenue and its surplus, though, are projected to tumble sharply by 27% and 58%, respectively in 2009-10 over the previous year’s revised estimates. Surplus is the difference between net revenue and dividend. The railways’ will pay Rs 5,479 crore dividend to the Centre in 2009-10, up from Rs 4,711 in 2008-09 RE(revised estimate). The gross traffic receipts are estimated to rise by 7.3% to Rs 88,419 in 2009-10, as compared to Rs 82,393 in 2008-09 RE, while the net working expenses are projected to rise by a much higher 14.36% to Rs 62,900 crore in 2009-10, as compared to Rs 55,000 in 2008-09 RE. This can attributed to the economic slowdown and the pay hikes suggested by the 6th Pay Commission.

As a result, railways’ operating ratio – a gauge of efficiency— is expected to rise to 92.5% in 2009-10, as compared to 88.3% in 2008-09. This means to earn revenue of Rs 100 in 2009-10, the railways has to spend Rs 92.5. This is deterioration to the level seen in 2002-03. The ratio has been raised by 2.6 percentage points over what Lalu has pegged in the interim budget. It stood at 75.9% in 2007-08.

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