Railways spends more for every rupee earned as operating ratio reaches 95%

In the railways, an operating ratio of 80% or lower is considered desirable

The operating ratio of the railways has witnessed a deterioration in comparison to previous fiscals indicating more expenditure and less saving for the public transporter, Lok Sabha was told on Wednesday.

The railways' operation ratio was 91.3 per cent during 2014-15. It improved to 90.5 per cent in 2015-16. However, for the fiscal 2016-17, operating ratio was 94.9 per cent, a deterioration over the last year.

In the railways, an operating ratio of 80 per cent or lower is considered desirable.

An operating ratio indicates how much the railways spends to earn a rupee. An operating ratio of 94.9 per cent means that the railways is spending 94.9 paisa to earn 100 paisa (one rupee). A lower figure of operating ratio is therefore regarded better and is indicative of better financial health of the system.

The recommendations of 7th Pay Commission with regard to pay and pension were approved by the government for implementation during 2016-17 and accordingly, the operating ratio of railways in revised estimates 2016-17 was estimated at 94.9 per cent, Minister of State for Railways Rajen Gohain said in the House.

Implementation of 7th pay panel has affected the railways as its expenditure for pay and pension has increased considerably.

Gohain said the railways sought assistance from the Finance Ministry to meet the additional liability arising out of 7th Pay panel recommendations.

However, the Finance Ministry advised the railways to explore raising own resources for implementation of the recommendations.