You are here: Home » Budget » Railway Budget » Top Stories
Business Standard

Surplus to double, operating efficiency improves at 88.5%

Plans to generate large surpluses from operations

BS Reporter  |  New Delhi 

With a 13 per cent increase in revenue generation, Railway Minister Suresh Prabhu is aiming to double the surplus to Rs 14,266 crore next year. A lot seems to be riding on operating efficiency for 2015-16, which is pegged at 88.5 per cent, the best in nine years.

Operating ratio, the ratio of expenses to earnings, is a parameter that measures the financial performance of an organisation. The lower the ratio, the more efficient the organisation..

Read our full coverage on Union Budget


The Railways would also give an 18 per cent higher dividend at Rs 10,810 crore to the government in 2015-16, and increase appropriation to development, capital and debt service funds.

Presenting his maiden Railway Budget, Prabhu said generating large surpluses from operations would be required to make the Railways financially sustainable "not only to service the debt needed to fund our capacity expansion, but also to invest on an ongoing basis to replace our depreciating assets".

This would require material improvement in operating efficiency, tighter control over costs, greater discipline over project selection and execution, and a significant boost to Railways' revenue-generating capacity.

Though the operating ratio target for next year looks a bit ambitious, the revised estimate of 91.8 per cent this year shows that the Railways has so far been able to better the target of 92.5 per cent set at the beginning of the year.

However, in the past few years, the Railways has not been able to meet the targets. In 2012-13, for instance, the Railways had estimated 84.9 per cent operating ratio but ended the year with 90.2 per cent.

Working expenses are expected to increase nine per cent to Rs 1,54,476 crore next year over the revised estimate of Rs 1,40,141 crore for 2014-15. The increase is mainly on account of a Rs 5,132-crore rise in staff costs and Rs 1,446 crore in leasing and hire charges payable to Indian Railway Finance Corporation.

On the earnings side, Prabhu is banking on a 17 per cent increase in passenger earnings at Rs 50,175 crore and a 12 per cent increase in goods earnings. Through an average three per cent increase in freight rates, through changes in the base class and in slabs above 1,500 km, the railway minister expects to garner Rs 4,000 crore of additional resources.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, February 27 2015. 00:43 IST