Lok Sabha Question No. 1210 (UNSTARRED), answered on 2018-07-25
Subject: Operating Ratio
Ministry: RAILWAYS
Asked by: ADVOCATE NARENDRA KESHAV SAWAIKAR

## GOVERNMENT OF INDIA MINISTRY OF RAILWAYS

## LOK SABHA UNSTARRED QUESTION NO.1210 TO BE ANSWERED ON 25.07.2018

## OPERATING RATIO

## 1210. ADV. NARENDRA KESHAV SAWAIKAR :

Will the Minister of RAILWAYS be pleased to state:

- (a) whether the Railways is facing worst ever operating ratio and if so, the details thereof during 2017-18 and 2018-19;
- (b) whether it is a fact that Comptroller and Auditor General in its latest  report  has  remarked  that Railways  had  under reported its  expenditure  liabilities  in  order  to  make  its  Operational Ratio look better than it actually was in 2016-17;
- (c) if  so,  the  details  thereof  and  the  reaction  of  the  Government thereon; and
- (d) the action proposed by the Government to effect improvement in Indian Railways?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF RAILWAYS

## (SHRI RAJEN GOHAIN)

(a) to (d): A Statement is laid on the Table of the House.

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STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (d)  OF UNSTARRED  QUESTION  NO.1210  BY  ADV.  NARENDRA  KESHAV SAWAIKAR  TO  BE  ANSWERED  IN  LOK  SABHA  ON  25.07.2018 REGARDING OPERATING RATIO.

- (a) The  Operating  Ratio  (OR)  of  Indian  Railways  (IR)  increased from 90.5% during 2015-16 to 96.5% and 98.4% during 2016-17 and 2017-18 respectively. The Operating Ratio of 2017-18 is marginally higher than the Operating Ratio of 98.3% witnessed in 2000-01. This is largely due to implementation of recommendations of 7th Central Pay  Commission  which  increased  expenditure  by  about ` 22,000 crore per annum  without  corresponding  increase  in earnings. Whenever Pay Commission recommendations have been implemented, there has been sudden increase in OR. However for 2018-19, the Operating Ratio of Indian Railways has been budgeted at 92.8%.

(b) & (c) In Para 1.8.1 of its Report No. 1 of 2018, the Comptroller and  Auditor  General  has  observed  that  'Taking  into  account  the actual amount of ` 40,025.95  crore  required  to  be  appropriated  to Pension Fund (instead of ` 35,000 crore), the working expenses of IR would  have  increased  by ` 5,025.95  crore  to ` 1,64,537.93  crore instead of ` 1,59,511.98 crore. Hence OR of IR would have been at 99.54 per cent instead of 96.50 per cent as mentioned above. Thus, the  OR  of  96.50  per  cent  does  not  reflect  the  true  financial performance of the Railways.'

As  per  procedure,  an  Action  Taken  Report  on  the  above observations  has  been  submitted  to  the  office  of  Comptroller  and Auditor General. The appropriation of ` 35,000 crore to the Pension Fund in 2016-17 was need based as there was a fund balance of ` 5,658  crore  from  the  previous  year.  The  current  appropriations  to the  fund  along  with  the  balances  already  available  from  previous year were enough to meet the pension outgo of ` 40,462.54 crore in

2016-17.  It  was,  therefore,  not  considered  financially  prudent  to appropriate more than ` 35,000 crore to the Pension Fund especially when Railway resources  were  under  severe  strain    on  account  of low  growth  in  traffic  earnings  and  sharp  rise  in  staff  cost  due  to implementation of 7th CPC recommendations.

The  methodology  for  calculating  Operating  Ratio  of  Indian Railways takes into account the amount of appropriation to Pension Fund and not the pension expenditure. Hence, the question of taking the pension expenditure of 2016-17 into account for calculating the Operating Ratio does not arise.

(d) The  Ministry  is  taking  measures  on  a  continuing  basis  to improve the financial position and to bring the Operating Ratio to a reasonable  level.  The  endeavour  comprises  of  a  combination  of initiatives  aimed  at  maximizing  revenue  receipts  and  minimizing controllable revenue expenses. Earnings enhancing measures, inter alia, include targeting progressively higher traffic throughput, effective and innovative marketing strategies to capture more and more traffic, creation of additional capacity and optimum utilization of the existing rail infrastructure including rolling stock, enhancement in productivity and efficiency, improvement of passenger  interface,  periodic  rationalization  of  fare  and  freight rates and focus on increasing the share of non-fare revenue sources in  Railways' earnings. Expenditure control measures include strict economy  and  austerity  measures,  improved  man-power  planning, better  asset  utilization,  inventory  management,  optimizing  fuel consumption etc.

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