Marked decline in efficient use of assets

The operating ratio, a measure of efficiency, has shown a sharp decline of about 12.4 points in FY09.

The operating ratio (OR), a measure of efficiency, has shown a sharp decline, of about 12.4 points in FY09 from the 75.9 recorded in 2007-08. It is the ratio of total expenses incurred by the railways for every Rs 100 earned.

The OR for 2009-10 has been proposed at 92.5, another deterioration from the 88.9 for 2008-09, due to a combination of reasons, including falling net revenue, increase in railways expenses and the impact of the sixth pay commission to the tune of about Rs 14,600 crore, among other reasons.

An OR ratio of 92.5 means the railways will incur expense of Rs 92.5 for every Rs 100 it will earn in 2009-10. The ratio was 83.2 in 2005-06 and had touched 76.3 in 2007-08.

With 1.4 million employees in 2008-09, the revenue earned per employee during the year was Rs 79,042. This is 37 per cent less than Rs 1.27 lakh earned per head in 2007-08. For 2006-07, it stood at Rs 1.02 lakh per employee. For 2009-10, it is projected at Rs 58,010. “I have now set more realistic targets for 2009-10 in the main budget based on the continuing trend of recession in the manufacturing sector and exports. However, I am confident that with the combined determination of the 14 lakh strong railway family, we will come back to the house with an even better performance,” said Mamata Banerjee.

The minister has fixed the freight target for 2009-10 at 882 million tonnes, an incremental loading of 49 mt over 2008-09, as a measure to increase earnings.