While Indian Railways is out of Covid, it continues to be plagued by a high operating ratio, as the Standing Committee on Railways noted in its report submitted on Monday.

Operating ratio is a benchmark of internal efficiency that measures operating expenses against revenue and is an important marker for the Railways. The lower the ratio, the healthier the finances are.

“The Committee is happy to note that the Railways have recovered from the pandemic impact in the current year and are expected to stage a better performance in 2023-24,” it said, adding that, even then, the operating ratio target of 98.45 per cent in the Budget Estimate for 2023-24 is “higher than the previous year’s operating ratio of 98.22 per cent” (Revised Estimate for 2022-23).

Operating ratio

The Ministry has mentioned that the higher operating ratio is due to the appropriation of ₹70,516 crore from Railway revenues to the pension fund, as against an estimated pension expenditure of ₹62,000 crore. The higher appropriation is to build up fund balance and increasing social service obligations of the Railways which impacted the Railways operating ratio adversely.

The Railways has also mentioned the various measures taken to arrest the high operating ratio, and these include capacity improvement through dedicated freight corridors, doubling or quadrupling and electrification of lines, ring-fencing allocation of ongoing last mile projects, and prioritising projects for early completion. All these are expected to generate additional revenue.

“Taking note that the operating ratio is a function of total working expenditure to total traffic earnings and that any effort to improve it revolves around maximising the traffic earnings and minimising the controllable working expenses, the committee expresses their concern over the higher value of the operating ratio and recommend the ministry regulate their finances,” it said.

The Committee noted that the operating ratio of Indian Railways has been persistently high: at 97.29 per cent in 2018-19, it rose further to 98.36 per cent in 2019-20, dipped slightly to 97.45 per cent in 2020-21, and rose to a four-year high of 107.39 per cent in 2021-22.

The Ministry reasoned for higher operating ratio in the year 2019-20 and 2020-21 are due to COVID related resource gap.

The Standing Committee has suggested that the Railways need to review their strategic outlook and “adopt a long-term strategy” for enhancing efficiency in operation and various maintenance units.

Vande Bharat Trains

According to the committee report, of the proposed 35 rakes (560 coaches) of Vande Bharat planned for the year FY23, only 8 rakes have been turned out till date. In FY24, the plan across three units is 67 rakes (1,072 coaches).

“They are of the view that with this pace of production, the Railways may find it difficult to achieve their set target,” it said, adding that the Ministry has to “intensify their efforts for the production of Vande Bharat rakes and coaches”.

“The Committee also desires that the Railways extend the technological support to other production units to enable them to manufacture the rakes and coaches of Vande Bharat Trains for bringing into the fleet,” it said.

Till February 17, the Railways have introduced 10 pairs of Vande Bharat Express.

While manufacturing of 400 Vande Bharat rakes has been planned in a phased manner within the Railway production units, that includes 120 rakes at Marathwara Rail Coach Factory (MRCF), Latur; 80 rakes at ICF, Chennai; 100 rakes at Rail Coach Navinikarn Karkhana (RCNK), Sonipat; and 100 rakes at Modern Coach Factory, Rae Bareilly. Different technology partners are being engaged too.