: Though the Railway finances were merged with the general finances for the first time in history, the Union Budget presented a bleak picture of the Indian Railways.
The Railways fell 9% short of its revenue target of ₹1,89,270 crore in 2016-17. Finance Minister Arun Jaitley projected a 10% increase in Railways’ revenues for 2017-18.
The operating ratio shot up to 94.9% in 2016-17, from 90.5% in the previous year, as a result of the implementation of the recommendations of the Seventh Pay Commission. This means, the Railways spent 94.9 paise to earn a rupee in 2016-17. Operating ratio is a measure of financial performance of the Indian Railways and a lower ratio means better efficiency. In 2017-18, the Railways expects the operating ratio to be at 94.57%.
“There was a hit of ₹30,000 crore on our finances due to the Seventh Pay Commission. When the last two Pay Commissions were implemented, the operating ratio deteriorated by 5-10%. However, this year, we will be able to manage an operating ratio that will be marginally higher at around 95%,” Railway Board Chairman A.K. Mittal said at a press conference here.
Goods earnings dip
The goods earnings decreased 0.3% in 2016-17 over the previous year’s to ₹1,08,900 crore, which was 7.7% short of the target. Passenger earnings increased 8.3% to ₹48,000 crore in 2016-17 from the figure of the previous year. However, it fell 6% short of its target for 2016-17. “We are falling short in revenue targets — both on freight and passengers. As far as passengers are concerned, we have earned more than what we earned last year. We had projected a very ambitious target of a 14% hike [in passenger revenues] over the previous year. That was perhaps too high and we thought we will be able to make it. As far as goods are concerned, we are down because the overall loading is down,” Mr. Mittal said.
The Finance Minister announced an 8% hike in capital expenditure of the Railways in 2017-18 to ₹1.31 lakh crore, up from ₹1.21 lakh crore in 2016-17. The government will provide a higher gross budgetary support of ₹55,000 crore in 2017-18, up from ₹46,355 crore in 2016-17 (revised estimates).
The higher budgetary support comes despite the fact that the Railways will no longer have to pay an annual dividend to the Finance Ministry. In fact, dividend payment of ₹9,731 crore has been waived as recommended by the Railway Convention Committee (2014).
Despite that, the Railways’ surplus (total receipt over expenditure after dividends) fell to ₹ 7,695 crore in 2016-17 from ₹ 10,505 crore in 2015-16.
