Transporter’s operating ratio worrisome at 97%
The Indian Railways’ earnings up to October this fiscal were lower than its own internal target for the period by R9,086 crore or 9%, resulting in a worrisome operating ratio (OR) of 97%. Although how much is appropriated to various railway funds during a period and other accounting contingencies could show the OR in a poor light for a given period within a fiscal, an OR of 97% (FY16 target is 88.5%) was still a cause of concern, analysts said.
Worse, the railways’ capital spending is also lagging the ambitious targets set in the Budget. The IR had ambitiously projected a 52% jump in its ‘Plan Budget’ spending that yields financial returns to R1 lakh crore for the current fiscal year. Budgetary capital spending during April-October this year was R17,520 crore, down 4.6% from the same period last year. Total capital spending — which includes spending from extra-budgetary sources- stood at R37,758 crore in the first seven months of the fiscal, up 6.8% from the year-ago period.
The national transporter has only managed to generate R26,031 crore from passenger revenue up to October this year, falling short by 10% form its internal target of R29,016 crore. The railways, which had pegged the passenger revenue to rise by 17% to R50,175 crore for FY 16, has only managed to sustain a growth of 7% till the end of October.
On the freight revenue front, things are not looking up either. Even though there were steep hikes in tariff — 6.5% last June and upon that another 5.5% in the latest budget — the railways only managed to register a revenue growth of 9.37% up to October compared with the target of 13.5% set for the fiscal. The transporter has managed to generate R62,119 crore from freight revenue by the end of October, missing its internal revenue target by 8%.
Market analysts state that the transporter has not able to bring its costs down which has led to such a high operating ratio. The 7th Pay Commission could raise the operational costs further, they added.
The only relief is that the transporter has been saving a bit on the ordinary working expenses (OWE), with a total expenditure of R68,959 crore by the end of October. IR has been able to save R2,806 crore in OWE up to October compared to its internal target of R71,765 crore. The transporter is looking for freight loading to pick up, which traditionally takes place in the latter half of the year.