If Indian Railways spends Rs 95 to earn Rs 100 this year, it hopes to make the system efficient enough to spend a lesser amount to earn the same amount next year.
In railway parlance, this is the operating ratio. And, the ministry expects to improve it by about 10 percentage points to 84.9 per cent in 2012-13.
Presenting his maiden Budget, railway minister Dinesh Trivedi on Wednesday set an even higher target for the 12th Five-Year Plan. He said the target was to bring down the operating ratio to 74 per cent in the terminal year of the 12th Five-Year Plan, an improvement over the record 74.7 per cent achieved in 1963-64.
For an organisation passing through a difficult phase, improving operating ratio means a two-pronged approach of cutting down expenses and increasing revenue. For the current year, the railways’ efficiency level was less than what was expected at the beginning of the financial year.
“After meeting the full dividend liability of Rs 5,652 crore, the excess remaining is only Rs 1,492 crore, against the budgeted amount of Rs 5,258 crore,” said Trivedi. A lower surplus resulted in the railways taking a loan of Rs 3,000 crore from the government. Besides, the operating ratio is estimated to be 95 per cent, against the budgeted target of 91.1 per cent.
At an operating ratio of 84.9 per cent, the railways is aiming at a surplus of Rs 15,557 crore. But this appears to be an ambitious target, considering that Indian Railways will close the current year with a surplus of only Rs 1,492 crore, almost the same level as that of 2010-11.
According to the railway minister, who took the bold step of raising passenger fares after eight years, the aim is to improve the railways’ finances. This would enable the railways build a strong base to meet the challenges ahead and bring back the confidence of people in it, “thereby dispelling all apprehension that Indian Railways is going downhill”.