Rail Budget 2013: Bansal's tough task to put Railways back on track
averaged at just 9%, the rate of real GDP growth. Rail freight traffic grew a dismal 6% in 2011-12 (nominal GDP expanded 16% in the year) and maybe 5% this year (nominal GDP growth around 13%).
On the one hand, Railways overcharges captive consumer industries like steel, coal, iron ore and cement even at the expense of volumes and market share, and on the other, it heavily subsidises passengers, especially those who travel by lower classes. Of Railways’ gross traffic receipts, 65% came from freight in 2007-08, when it recorded a healthy operating ratio of 75.9 and the share of freight in gross traffic receipts has only increased to 67% this year.
The operating ratio is the ratio of total receipts to total expenditure including appropriation to Depreciation Reserve Fund meant to replenish existing assets and Pension Fund but excluding Capital and Development Funds.
The decline in operating ratio has depleted Railways funds drastically since 2007-08, when their combined closing balance stood at an encouraging Rs 22,279 crore. One won’t be surprised if the Revised Estimate for this year’s opening fund balance is close to nil.
The Capital Fund supposed to be used for creating new revenue-generating assets had soared to Rs 11,072 crore in 2007-08 but remained exhausted in 2009-10. Appropriations to this Fund only marginally exceeded withdrawals in subsequent years, and this year’s BE shows net allocation of Rs 5,000 crore, a impossible task given the current state of affairs. The operating ratio for this fiscal could be around 90, although 84.9
