Railway spends Rs 22,000 crore on salary, pensions; finances take a hit

Railways have been spending an additional Rs 22,000 crore on salaries and pensions of its employees following implementation of the 7th Pay Commission recommendations, which has hit its financial health, Railway Minister Piyush Goyal said in Lok Sabha on Wednesday.

Responding to a question on operational losses of railways, Goyal said construction of new lines and operating trains in economically unviable areas under its social obligations also take away a sizeable amount of its funds.

"After the implementation of 7th Pay Commission recommendations, there has been an over expenditure of Rs 22,000 crore for salaries and pension of railway employees. This has contributed to the overall operating loss," he said during Question Hour.

The minister said railways spend a lot a funds on cleanliness, running suburban railway trains, gauge conversions and others.

"All these have cost and have effect on railways," he said.

"When we see the overall picture, implementation of the 7th Pay Commission recommendations and running trains under social obligations lead to operating ratio going down by 15 per cent in just one year," he said.

Goyal said time has come to explore the possibility of separating the budgets of social obligation expenditure and trains running in commercially viable sectors.

According to a report of the Comptroller and Auditor General (CAG), which was tabled in Parliament on Monday, railways recorded an operating ratio of 98.44 per cent in 2017-18 which is the worst in the previous 10 years.

A measure of expenditure against revenue, the operating ratio shows how efficiently the railway is operating and how healthy its finances are. An operating ratio of 98.44 per cent means that railways spent Rs 98.44 to earn Rs 100.

The national auditor in its report on railways' finances, said railways would have ended up with a negative balance of Rs 5,676.29 crore instead of a surplus of Rs 1,665.61 crore but for the advance received from NTPC and IRCON.