FINANCES: Cash surplus after dividend in 2008-09 is expected to drop by Rs 5,538 crore to Rs 14,609 crore.
The financial performance of Indian Railways deteriorated in the current fiscal, as implementation of pay revision for its 2.5 million employees and pensioners, combined with increase in fuel costs till August last year, dragged down its surplus.
Cash surplus after dividend in 2008-09 is expected to drop by Rs 5,538 crore to Rs 14,609 crore, compared with the earlier projection of Rs 20,147 crore. This is expected to fall even further to Rs 13,543 crore in the next fiscal.
Presenting the Interim Railway Budget for 2009-10 in Parliament on Friday, Railway Minister Lalu Prasad said implementation of the Sixth Pay Commission recommendations resulted in additional expenditure of Rs 8,500 crore in the current fiscal, over and above the initial provision of Rs 5,000 crore.
Fuel prices, which increased rapidly in the first six months of 2008-09, also contributed to the increase in operating expenses. Fuel expenditure has been revised upwards to Rs 14,218 crore as against Rs 12,150 crore incurred in the previous fiscal (2007-08).
Total receipts for the next financial year are projected to increase by 13 per cent to Rs 95,306 crore, compared with the revised estimate of Rs 84,233 crore. But total working expenses are projected to grow at a higher rate of 15 per cent to Rs 83,590 crore, compared with Rs 72,490 crore in the current fiscal.
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However, this is lower than 36 per cent growth in expenses in 2008-09. It is not clear whether the Budget estimate for 2009-10 takes into account the full impact of the Sixth Pay Commission report being implemented.
Further, the provision for depreciation reserve is kept at last year’s level of Rs 7,000 crore. A higher provision would have adversely affected the net revenue.
Operating ratio: The operating ratio, which measures a company’s operating expenses over its revenues, is projected to drop to 88.3 per cent in the current fiscal, and even further to 89.9 per cent in 2009-10.
From an operating ratio of 92.1 per cent in 2003-04, Lalu Prasad took credit for improving the financial health by bringing down the ratio to 75.9 per cent in 2007-08. However, a combination of three factors — Sixth Pay Commission, economic downturn and a spike in fuel prices — this time increased the cost of running the vast railway network.