The Hindu Business Line : Zonal Rlys must bite the bullet

IN THE backdrop of the operating ratio of several Zonal Railways hovering over 100 per cent, a Parliamentary Committee has called for "curbing of undesirable expenditure of the zonal railways."

The Committee has "insisted" that Railway Board should emphasise that each Zonal Railway should curb undesirable expenditure and work towards enhancing efficiency and productivity to raise its earnings.

Indian Railways aims to achieve an operating ratio 90.3 per cent in 2005-06 fiscal.

For 2004-05, the Railways expects to register an operating ratio of 91.2 per cent, according to provisional estimates.

The Railway Ministry calculates the operating ratio by dividing the total working expenses (excluding suspense) to the total traffic earnings.

Traffic earnings — from passenger and freight — constitute nearly 95 per cent of the Railways' earnings.

For example, for the financial year 2004-05, Eastern Railway registered an operating ratio of 167.1 per cent, North-Eastern Railway recorded 158.7 per cent, North East Frontier Railway 152.1 per cent, North Eastern Railways 109.1 per cent and Southern Railway 118.9 per cent, according to the Budget Estimates.

The Zones that registered relatively healthy operating ratios include East Central Railway at 98.8 per cent, South-East Central Railways at 60.1 per cent, South-Western Railway at 89.5 per cent and Western Railway at 92.7 per cent.

However, not all Zonal Railways are evenly placed with regard to traffic earnings, given their distinct jurisdiction and geographical location.

Traffic earnings, in turn, are apportioned across Zonal Railways, based on distances traversed on the respective zones.

Moreover, the Committee also notes that each of the Zonal Railways would incur operating expenses that include an element of fixed cost necessary to keep the system operative irrespective of their traffic output.

But at the same time, given that the Railways maintains that 90 per cent is an ideal operating ratio and is comparable with that of countries like China and France, the Committee has asked the Railways to monitor and manage finances regularly. It has advised the Railways to "keep a check on undesirable expenditure so that the operating ratio may further improve towards ideal ratio."

On an overall basis, the Ministry has taken steps to control expenses. Zonal Railways have been assigned monthly targets in terms of revenues and expenditure.

"Spending limits are fixed which are lower than their budgetary allocation so as to encourage economy," points out the report.

As a result of these measures, the operating expenses of Indian Railways have gone up by 3.6 per cent on an annual basis, whereas the traffic earnings have shown a higher annualised growth of 6.7 per cent on an average.

The overall operating ratio has increased from 98.3 per cent in 2000-01 to 92.1 per cent in 2003-04.

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