Railways operating ratio set to worsen despite support

Railway Minister Ashwini Vaishnav pegged the operating ratio for FY23 at 98%, lower than the 96% budgeted this fiscal.

As per the FY23 budget documents, Railways’ operating ratio slid from the budgeted levels to 98.93% in FY22, and was to improve to 96.98% in FY23.

Operating ratio—a benchmark of internal efficiency—measures the ratio of operating expenses to revenue and is an important marker for the Railways in the budget. The lower the ratio is, the healthier the finances are.

In 2019, the Comptroller and Auditor General of India said in a report that the Indian Railways had the worst operating ratio in the past decade at 98.44%. “Revenue from freight and passenger travel is estimated at ₹2.4 trillion,” Vaishnav told a news conference on Tuesday. “The 400 Vande Bharat trains will be Version 2 of the earlier model. The design is complete and production will start by August this year,” he said.

Vaishnav said the railways is working to improve the operating ratio.

“We have managed to achieve four million tonnes loading every day and are targeting 4.5 to 5 million tonnes per day,” he said.

Railways’ revenue from traffic, both freight and passenger, plummeted in the last financial year due to covid-related curbs on mobility. The budget for FY23 has allocated ₹1.4 trillion to the railways. This will mark an increase from this year’s ₹1.1 trillion.

Vaishnav said the funds allocated in the budget will be used for the completion of super-critical projects with the primary focus areas being capacity enhancement and safety.

He said the budget allocation will be “crucial in completing the projects that were stuck owing to the lack of investment.” “Besides, we will focus on connecting areas which were not part of the Railway network,” the minister said.

In FY21, the railways had received a special loan of ₹80,000 crore from the Centre to help it keep its operating ratio under check as covid-led disruptions widened the gap between spending and revenue.

Meanwhile, presenting the budget, finance minister Nirmala Sitharaman said “as part of Atmanirbhar Bharat, 2,000 km of network will be brought under Kavach, the indigenous world-class technology for safety and capacity augmentation in 2022-23″.

She said 400 new-generation Vande Bharat Trains with better energy efficiency and passenger riding experience will be developed and manufactured over the next three years.

“One hundred PM GatiShakti Cargo Terminals for multimodal logistics facilities will be developed during the next three years. Multi-modal connectivity between mass urban transport and railway stations will be facilitated on priority. Design of metro systems, including civil structures, will be re-oriented and standardized for Indian conditions and needs,” the minister said.

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