 "Railway workers clean a coach at a railway yard in the old quarters of Delhi")
Indian Railways’ (IR) losses from delivering services below operation costs have registered a decline for the first time in six years, owing to a combination of factors.
These include depressed volumes, easing of fuel and traction costs, as well as a minor increase in passenger and freight rates.
The new trend signals improving finances, even as Rail Minister Suresh Prabhu is struggling to manage the additional burden on staff cost on account of the Seventh Pay Commission recommendations.
Fresh data show that IR suffered losses of Rs 24,938 crore in 2015-16 due to concessions on both passenger and freight services, apart from carrying essential commodities below cost of operation.
This is around two per cent less than the loss of Rs 25,346 crore in FY15.
The total financial impact of social service obligation on IR was Rs 34,106 crore in 2015-16, according to the Revised Estimates in the Budget.
This included Rs 34,030 crore of loss on coaching services, including suburban and non-suburban passenger traffic, parcel and luggage. The remaining Rs 76 crore is attributed to the loss on essential commodities carried below cost of operation.
The net financial impact of Rs 24,938 crore was arrived at after deducting staff welfare and law and order costs of Rs 9,168 crore. The decreasing trend observed in 2015-16 is in stark contrast to the 18 per cent jump in losses observed in 2014-15 and the average annual growth of around 15 per cent in these losses in the past six years since 2009-10.
