Railways' operating ratio worst in last 10 years: CAG

The Comptroller Auditor General of India said in a report that the Railways' operating ratio has been the worst in the last ten years at 98.44%

An Indian railway worker looks out from a long distance passenger train as it approaches a platform in Mumbai on July 5, 2019. (AFP Photo)

The Comptroller and Auditor General (CAG) on Monday painted a grim picture of the Indian Railways' financial health as it said that the operating ratio in 2017-18 was 98.44%— the worst in 10 years.

The CAG report titled 'Railways Finances', tabled in Parliament said that since 2016-17, the Railways’ revenue surplus has been falling which is indicative of its failing financial health.

During the year 2017-18, the net revenue surplus decreased by 66.10 % from Rs  4,913.00 crore in 2016-17 to Rs 1,665.61 crore in 2017-18.

"The factors mainly attributable to meagre surplus were increase in working expenses (8.14 %) and negative growth rate of sundry earnings (16.20 %). Staff cost including pension payments constituted the bulk of working expenses," the audit report said.

The Indian Railways in 2017-18 would have ended up with a negative balance of Rs. 5,676.29 crore instead of surplus of Rs 1,665.61 but for the advance received from NTPC and IRCON. Similarly, operating ratio would have been 102.66%, it said. 

The operating ratio shows how efficiently the company is working and how healthy are its finances. In the Railways' case, an operating ratio of 98.44 % means that the Railways spent Rs 98.44 to earn Rs 100.

Decline in generation of internal resources resulted in greater dependence on Gross Budgetary Support and Extra Budgetary Resources (EBR) for meeting its capital expenditure. An increased reliance on borrowings will further exacerbate the grave financial situation of Indian Railways, the report said.

The Railways has also been unable to meet its operational cost of passenger services and other coaching services. Almost 95% of the profit from freight traffic was utilised to compensate for the loss on operation of passenger and other coaching services, it said.

On concession allowed to passengers, the CAG said that 89.7% of the revenue forgone towards concessions was on account of concession to senior citizens and privilege pass.

The response to "give up"scheme from the senior citizens passengers was not encouraging.

Misuse of passes and irregular grant of concessions on medical certificates were noticed.

Passenger Reservation System lacks adequate validation controls to validate age of freedom fighters and to prevent irregular multiple booking on the same privilege pass.

Checks and Measures:

Railways needs to augment its internal revenues.

Privilege pass provided to railways' employees rationalised.

Need to timely replacement of old assets.

Misuse of concessions in railway fares should be checked.

Response to railways “Give it Up” scheme was not encouraging.

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