Indian Railways Under Financial Crisis

Indian Railways may have recorded its safest-ever performance in the first six months of this financial year with zero passenger fatalities but the national transporter is also facing a financial crisis due to implementation of the Seventh Pay Commission recommendations, Railway Board Chairman V.K. Yadav said on Monday.

On the financial condition of the national transporter, Yadav said: "No doubt that the railways is facing financial challenges. And to come across the financial crisis, the railways is doing a lot of things."

He stressed that the railways faced the financial issues due to the implementation of the Seventh Pay Commission recommendations, as it has around 12 lakh employees and 13 lakh pensioners". "But things will start improving in the next few months," he asserted.

The Indian Railways recorded an operating ratio of 98.44% in 2017-18, the worst in the last 10 years, the Comptroller and Auditor General (CAG) said in its report tabled in Parliament on December 2 this year.

According to railway officials, the operating ratio is a measure of expenditure against revenue and it shows how efficiently the national transporter is operating and how healthy its finances are. An operating ratio of 98.44% means the Railways spent Rs 98.44 to arn Rs 100.

The government auditor also highlighted that since 2016-17, the revenue surplus of the national transporter has been falling, which is indicative of failing financial health of Indian Railways.

"During 2017-18, the net revenue surplus decreased by 66.10% from Rs 4,913.00 crore in 2016-17 to Rs 1,665.61 crore," it pointed out.

The CAG also said that the factors mainly attributable to meagre surplus were increase in working expenses (8.14%) and negative growth rate of sundry earnings (16.20%). "Staff cost, including pension payments, constituted the bulk of working expenses," the CAG said.

The national transporter would, in fact, have ended up with a negative balance of Rs 5,676.29 crore instead of surplus of Rs 1,665.61 crore, but for the advance received from NTPC and IRCON, it said.

The Chairman also said that the national transporter, which got the highest ever capital expenditure in this year's Budget at Rs 1.6 lakh crore, had utilised over Rs 1.03 lakh crore, which is 63.7% of the total amount.

With the increase in the capex amount the railways was able to take up many infrastructure works across its network for the doubling and tripling of railway tracks, for broad gauge conversion and for laying the new lines and for electrifying its network, he said.

He also emphasised how the railways brought down its expenditure of over Rs 12,000 crore on fuel in the last two years by switching to the electric locomotives.

"We had set a target of saving around Rs 40,000 crore in the next 10 years, but we are now able to save by over Rs 6,000 crore consecutively on fuel in the last two years," he said, adding that if we keep on saving like this, then we would be able to Rs 60,000 crore and more in the coming years on our fuel expenses.

Speaking to media persons here, the Chairman said, "With our focus on the safety of passengers, the railways took number of works including the upgradation of railway tracks and its coaches and it resulted in zero passenger fatalities in this financial year from April 2019 to November 2019."

He also said that as part of the mega plan on safety of the passengers, the railways eliminated unmanned railway crossings at 904 places between April 2019 to November 2019, which is 200% more as compared to 296 during the same period last year.

He also said that it renewed over 3560 km of the tracks across the country between this period and also rehabilitated over 861 bridges. "These steps also ensured in improving the punctuality of the trains as mail or express trains punctuality rate between April 2019 to November 2019 was at 76.67% as compared to 68% last year during the same period," he said.