Efficient use of resources earmarked

The operating ratio has been declining over the years due to net revenue fall, low passenger earnings and Sixth Pay Commission impact.

The operating ratio (OR), a measure of efficiency of the Indian Railways, for 2010-2011 has been proposed at 92.3 per cent from a revised OR of 94.7 per cent in 2009-10. It was projected to be 92.5 per cent this year.

OR or the ratio of total expenses incurred by the railways for every Rs 100 earned had been witnessing a steady decline from 90.5 per cent in 2008-09 and 75.9 per cent in 2007-2008 on account of falling net revenues, gross tariff receipts, passenger earnings and Sixth Pay Commission.

“The passenger segment has been below expectations. Adverse weather conditions during winter in the North and rail rokos and agitations have severely impacted passenger earnings… The impact of Sixth Pay Commission has greatly affected the revenue generation capacity of the railways. The provisions made for meeting the arrears and enhanced salaries and allowances in the Budget Estimates have proved inadequate,” Railway Minister Mamata Banerjee said, while presenting the Railway Budget for 2010-11 today.

Banerjee added that the railways had to provide additional funds of Rs 2,600 crore to meet its mandatory liabilities of salaries and allowances against a higher requirement of Rs 4,590 crore. Pension liabilities have also been revised upward and are likely to be Rs 15,000 crore compared to Rs 14,000 crore in the Budget Estimates.

She said, however, with the ongoing austerity drive being followed by government employees, it hopes to absorb the additional requirement for staff expenses, along with post-budgetary increases in diesel prices, to a sizable extent.

“The OR of 92.3 per cent is achievable with optimum use of existing resources. The minister is making all efforts to do this by taking a cue from the private sector,” said Naveen Balodia, director, KPMG.

Passenger earnings for 2010-2011 is expected to grow 5.3 per cent at Rs 26,126.47 crores from the revised estimates of Rs 24,309 crores in 2009-10.