More bang for the buck: Operating ratio at 76.3

The operating ratio, a measure of efficiency, has been steadily improving, falling 5 percentage points in FY 07 from 83.2 recorded in 2005-06.

The record profits earned by the railways show up in the better operating ratio recorded in 2007-08. The operating ratio for the year has been revised to 76.3, which is 2.4 percentage points better than the 78.7 recorded in 2006-07.

The ratio, a measure of the railways' efficiency, has been steadily improving, falling 5 percentage points last year from 83.2 recorded in 2005-06. The ratio was over 90 three years ago.

The Budget estimate for operating ratio in 2008-09 is 81.4, after providing for higher salaries in line with the expected recommendations of the Sixth Pay Commission.

Operating ratio implies profits for every Rs 100 earned. An operating ratio of 76.3 means the railways made a profit of Rs 23.7 on every Rs 100 it earned. In 2006-07, the profit made was Rs 21.3 on every Rs 100 earned. 
 

WORKING SMARTER Revenue per employee (In Rs)
2004-05	37,137
2005-06	70,438
2006-07	1,02,549
2007-08	1,27,006

With 1.45 millon employees in 2007-08, the revenue earned per employee during the year was Rs 1.27 lakh. This is 24.5 per cent higher than the Rs 1.02 lakh revenue each employee earned in 2006-07. In 2005-06, each employee earned Rs 70,400 of revenue for the railways.

"In the last four years, we have achieved incremental loading by 233 MT and have added Rs 14,00 crore of freight earnings by reducing the wagon turnaround time and increasing payloads," said Railway Minister Lalu Prasad.

However, analysts say the turnaround time has remained flat at five-and-a-half days over the last three years. In 2004-05, the wagon turnaround time was seven days.

"There is scope to improve mobility and thus reducing the turnaround time. However, the current turnaround time is very good and competitive. It cannot keep reducing drastically," an analyst said.

The railways are targeting a freight load of 1,100 million tonnes and passenger traffic of 8.4 billion by 2012.

"We followed a strategy of playing on volumes, driving down unit costs, reducing tariffs and increasing market share to achieve record profits," Prasad said.