The improvement in the operating ratio of Indian Railways means that it was able to reduce its expenditure and make up for the shortfall in passenger traffic through revenue generated by freight train operations.
With limited passenger train services running for most of the year without subsidies or concessions and severely tightening of expenses, Piyush Goyal-led Indian Railways has witnessed a better operating ratio. In the financial year 2020-21, the national transporter recorded an operating ratio of 97.45 per cent, while in the previous fiscal, it was 98.36 per cent, as per an RTI reply by the Railway Board to a query by MP-based activist Chandra Shekar Gaur. The operating ratio refers to the amount spent to earn every Rs 100. The improvement in the operating ratio of Indian Railways means that it was able to reduce its expenditure and make up for the shortfall in passenger traffic through revenue generated by freight train operations, according to a PTI report.
A railway spokesperson said that the expenditure of Indian Railways was monitored and regulated strictly in line with train operations. In the past seven years, investments made in electrification helped the national transporter save substantially in diesel cost and also to be a more environmentally conscious organization. Some of the other expenditure control steps included the strict economy and austerity measures, better asset utilization, inventory management, improved manpower planning, etc. The railway spokesperson said these initiatives were further supported by higher freight revenues.
However, the national transporter was aided in its austerity measures as it didn’t operate the highly subsidized passenger segment in full throttle in the year 2020-21. Till the year-end, Indian Railways operated nearly 65% trains with no concessions for any passenger category, with the exception of a few, saving crores. Besides, it saw a sharp decline in pension liabilities with Indian Railways making an arrangement with the finance ministry to defer this expense. With the electrification of major railway routes, Rs 9,500 crore was also saved by the national transporter in traction cost over the year 2019-20. Similarly, Rs 4000 crore savings were done through rationalization as well as optimization of duties.
Indian Railways also saved an amount of Rs 3,000 crore last year as compared to fiscal 2019-20 by rationalisation and optimization of contracts as well as procurement of goods and services. According to the spokesperson, other revenue-enhancing measures inter alia, include targeting progressively higher traffic throughput, innovative and effective marketing strategies to capture more traffic by BDUs at all levels, expansion of commodity basket, optimum utilization of existing railway infrastructure, including rolling stock, enhancement in productivity as well as efficiency and focus on increasing the share of non-fare revenue sources in the total revenue of Indian Railways.
Moreover, despite COVID-19 challenges, Indian Railways reported record freight loading in the financial year 2020-21. In 2020-21, freight loading stood at 1,232.63 million tonnes, up 1.93% over 1,209.32 million tonnes the previous fiscal, according to the Railway Ministry. During fiscal 2020-21, freight loading revenue stood at Rs 1,17,386 crore, which is 3% higher compared to Rs 1,13,897.20 crore in the financial year 2019-2020.