The Indian Railways' operating ratio had crossed 100% in November 2019, indicating an operational deficit.
Indian Railways just about managed to keep its head above water in FY19 with an operating ratio (OR) of 97.3%, but only after getting state-run NTPC and Container Corporation of India (Concor) pay Rs 10,000 crore and Rs 3,000 crore, respectively, in advance as freight charges for the current financial year. The national transporter’s OR had crossed 100% in November 2019, indicating an operational deficit. OR is the share of operational expenditure in revenue.
According to a railway official, the improvement in OR is due to a two-pronged approach —advance freight charges and expenditure containment. For FY19, the transporter was able to contain its expenditure a tad below the revised estimate (RE) of Rs 1.43 lakh crore.
Railways’ capital expenditure, which it manages with assorted borrowings apart from a tiny operational surplus and support from the Budget, stood at Rs 1,33,396 crore for FY19 — an all-time high and was up Rs 30,000 crore from the capex achieved a year ago. The actual capex, however, turned out to be less than the RE of Rs 1,38,000 crore and the budget estimate (BE) of Rs 1,46,500 crore.
Railways spent the entire earmarked gross budgetary support (GBS) of Rs 53,060 crore for FY19, said the official. It is not unusual that the finance ministry cuts the actual GBS from the BE level; for instance in FY18, the GBS was cut by around Rs 10,000 crore from BE.
The passenger earnings in FY19 were Rs 51,066 crore; though higher than Rs 48,673 crore in FY18, it was short of the RE of Rs 52,000 crore. Similarly, freight receipts for FY19 was Rs 1,27,430 crore, which is higher than Rs 1,17,500 crore last year but below Rs 1,29,750 crore estimated for FY19 (RE).
The social obligation cost was around Rs 40,000 crore for FY19. This cost includes not only subsidised passenger fares, but also low freight rates for essential commodities. The air-conditioned three-tier is the only passenger category which is profitable for the railways. Also, the official added that not all zones are a burden on the finances. “There are seven zones which have operating ratio less than 100% but the other 10 are a drag,” said the official. The East Coast Railway (53%), Southeast Central Railway (55.9%), West Central Railway (66.2%) and North Central Railway (69.1%) are among the top performing zones in terms of operating ratio for FY19, but zones such as Metro Railway (253.6%), North Eastern Railway (207%) and Eastern Railway (180%) are laggards.