We shall overcome the financial crunch: Railway Chairman
Railways have been hit hard due to the implementation of Sixth Pay Commission report which drained Rs 55,000 crore from its coffers and may take "two to three" years to absorb the impact, Railway Board Chairman Vivek Sahai said.
"Some method should be found to arrive at a solution to reduce the impact (on railways) because it happens after every pay commission," he said.
He said Railways is the only organisation paying its employees from its internal resources, and observed "it takes about two to three years to absorb the impact".
He also allayed fears about the rising operating ratio, contending that it will come down once the effect of the pay commission report dissipates.
The operating ratio is hovering at around 95.3 per cent, which implies railways are spending more and earning less.
Sahai also exuded confidence that earning targets for the current fiscal would be "achieved".
He said after the Fifth Pay Commission was implemented, the operating ratio had also gone up 90.5 per cent but came down to about 75.9 per cent in 2007-08.
"Railways is a very upright and robust organisation and it will meet the challenge posed by the payments of huge arrears for Sixth Pay Commission recommendation as well as the increased requirement of pension fund," he told PTI.
He said in 2008-09 railways had to pay 40 per cent of the arrears to its employees while implementing pay panel recommendations which pushed up operating ratio to 90.5 per cent. In 2009-10 the operating ratio went up to 95.3 per cent because 60 per cent of the arrears were paid.
Railways, the largest public-sector employer, has 14 lakh employees and 12 lakh pensioners to whom it had to dole out Rs 55,000 crores for implementing the pay commission report including Rs 14,500 crores on account of pension liabilities from its internal resources.
Railways pension liability after 6th pay commission is at Rs 1,500 crore per annum. It also faces the additional burden of shelling out Rs 1,500 crores to its employees under modified assured career progression scheme.
Sahai said the extra burden of Rs 1,000 crores on account of the hike in diesel prices also impacted the organisation financially.
"Though these factors were beyond railways control, suitable steps are being taken to improve the earnings and control the expenditures", he said.