Railway Budget 2018 has set an ambitious target of attaining an operating ratio of 92.8% for FY 2018-2019, feels Bharat Salhotra, Vice President of Sales & Business development, APAC at Alstom. Finance Minister Arun Jaitley on February 1 presented the Union Budget 2018, of which the Railway Budget is now a part. The union budget 2018, which was the last full budget of Modi government ahead of the Lok Sabha elections 2019, proposed many initiatives in order to boost Indian Railways. For one, it saw the highest ever capital expenditure of Rs 1.48 lakh crore being announced. For another, the Railway Budget 2018 was focused on capacity augmentation, electrification, station redevelopment and overall infrastructure upgradation of Indian Railways.
Alstom’s Salhotra, while interacting with Financial Express Digital said, “Indian Railways focus on capacity augmentation should ultimately lead to improved fluidity, higher speeds and better customer satisfaction through decongestion of the rail network. This should in turn improve reliability of rail services and in turn give a fillip to freight and passenger growth.” “The focus on electrification should allow Indian Railways to not only reduce dependence on fossil fuel-based traction but also save the nation’s precious foreign exchange. The proposal to electrify the remaining non-electrified network, provides several opportunities for Alstom – be it enhancing the production of electric locomotives or implementing electrification projects using mechanised means that could allow execution of up to 12 km per day,” he added.
Asked about the operating ratio target set by Indian Railways, Salhotra said, “Given the burgeoning operations of railways, their target of achieving an operating ratio of 92.8% is a challenging one.” “Capacity augmentation projects are long gestation projects and they are not likely to have an immediate impact on top line revenues,” he added.
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Operating Ratio of an organization is a numeric figure which is calculated to determine the overall performance of the company. This is done when operating expense is divided by the operating revenue. Similarly, in Railways operating ratio refers to the amount which is spend by the Railways to earn a rupee. Therefore, a lower operating ratio figure indicates better financial condition of the organization.
Post Union Budget 2018 speech by finance minister Arun Jaitley, it is estimated that the Operating ratio for financial year 2018-19 is to be 92.8 per cent, as against 96 per cent, in year 2017-18. The 92-year old practice of announcing separate Railway budget was discontinued last year as both the Railway budget and the general budget was merged by Modi government with the Committee recommendations, headed by NITI Aayog member Bibek Debroy. This made the former Rail minister Suresh Prabhu, the last Railway minister to present the separate Railway Budget 2016 in the parliament.