A 10% reduction in expenditure could hit the railways' modernisation and expansion projects, which were any underprovided for, owing to the high (and unhealthy) operating ratio of 88. Official sources said safety measures won't be compromised but independent experts doubt this.
The shortfall in railway internal general earnings is despite the national transporter de-linking the increase in fuel cost to its operation cost by implementing a fuel adjustment charge (FAC) of over 5% in both freight and passenger fares earlier this year.
There has been a 10% cut in plan outlay because of a fall in internal generation. We have lost passengers on 0-60 km short distance. On freight, the loading is very much on the lines of budget estimates but the lead (average distance of freight carried by railways) has been at around 620 km against our budget estimated of around 640 km, said a railway board official.
At present, shortfall in passenger segment is around Rs 5,000 crore, whereas in freight, it is expected to be around Rs 2,000 crore. From passenger segment, the railways was expecting to earn Rs 43,000 crore in the current fiscal whereas the budget estimate for freight is Rs 93,000 crore.
With the revision in passenger fares of by almost 20% in last January and also the implementation of the fuel adjustment component (revised every six months), the railways was expecting that its cross-subsidisation would come down. But this has clearly not worked .
In the past ten years, unit freight realisation (railways average income from transporting one tonne of goods over a one-km distance or revenue per net tonne-km) has increased by almost 68 paise as against the unit passenger realisation (moving an average passenger for every km) that has increased by 10 paise in past 10 years.
The losses on these passenger segment have mounted from Rs 4,955 crore to Rs 24,600 crore in the last fiscal.
This year it is expected to increase to Rs 26,000 crore.
In 2012-13, revenue per net tonne-km (freight) stood at Rs 1.33 as against Rs 0.29 from moving an average passenger for every km.
This year, unit freight realization is expected to be Rs 1.38 as against Rs 0.35 from passenger realization. According to the White Paper (December 2009) of the railways, its freight rates are 50% higher compared to major freight railways such as US Railroads, Chinese and Russian railways. The passenger fares in India are low compared to most foreign railways. The operating ratio of the railways from April to December has been around 88, whereas in the budget it is projected to be 87.5.