Operating ratio indicates worsening condition; Sixth Pay Commission resulted in expenditure surge, says Mamata Banerjee.
The operating ratio (OR), a measure of efficiency of the Indian Railways, for 2011-12 has been proposed at 91.1 per cent from a revised OR of 92.1 per cent, which was earlier projected at 92.3 per cent.
The OR is the ratio of total expenses incurred by the railways for every Rs 100 earned. A high OR implies low profitability for the railways.
“By prudent financial management, we have not only paid the full dividend for 2009-10, but also achieved an OR of 95.3 per cent. In fact, if we do not take arrears for the Pay Commission into consideration, which rightfully are liabilities of previous financial years, the OR would have been 84 per cent, despite payment of higher salaries and pension. If the salaries and pension are also kept at the earlier levels, the OR comes down further to 74.1 per cent,” Union Railway Minister Mamata Banerjee said, while unveiling the Railway Budget for 2011-12 on Friday.
Banerjee also said 2010-11 turned out to be a challenging year for the Indian railways. The implementation of the Sixth Pay Commission has resulted in expenditure surge on staff and pension by a whopping 97 per cent, she said.
“The latest assessment of the Pay Commission’s impact reveals an additional expenditure of Rs 73,000 crore during the 11th Plan period,” she added.
The OR had been precariously rising from 90.5 per cent in 2008-09 and 95.3 per cent in 2009-10, on the back of falling net revenues, gross tariff receipts, passenger earnings and the Sixth Pay Commission. The ratio had come down to 75.9 per cent during Lalu Yadav’s tenure in 2007-08.
The OR in financial year 2009-10 of the Indian railways at 95.3 per cent has remained sharply weak on the back of escalating costs. It affects the capability of the railways to spend on capacity-building activities in a big way.
“Overall, finances have deteriorated and the OR has touched 93 per cent. One can only hope that the railway ministry picks up pace in public-private-partnership proposals and quickly sets up a single window for such approvals. All-in-all, a negative Budget on expected lines,” Amar Ambani, head of research, IIFL, said.
The Railway Ministry has a huge backlog of ongoing projects, which requires an investment of Rs 98,352 crore.
Provision of Rs 6,735 crore has been made for dividend payment and the excess for railways for the new financial year has been projected at Rs 5,258 crore with an OR of 98.1 per cent. From Rs 25,000 crore in 2007-08, railways’ cash surplus declined to Rs 17,400 crore in 2008-09 and in 2010-11, it was only Rs 1,328 crore.
