In his budget speech unveiling the proposals and policy thrusts for 2013-14, the railway minister was at his ebullient best when he described the operating performance – as reflected in the operating ratio (OR) during the current year– as among the best and attributed it to consistent efforts at financial discipline.
Well, not quite. One, the operating ratio is estimated at 88.8%. This is almost 400 basis points higher than the budget estimate of 84.9%. Does this suggest any turnaround in the working of this premier infrastructure:
Two, when the budget for 2012-13 was presented a year ago, it was assumed that the OR could drop to 84.9% based on a surge in gross traffic receipts (27%), while working exepnses would be lower at 12%.
But as per revised estimates, while traffic earnings are slated to sharply lower this fiscal, the estimate of working expense, at `84,400 crore, will match with the budget project. Clearly, the OR is based on an unrealistic assumption in regard to working expenses.
Three, if the efforts at financial discipline have led to a surge, instead of a drop in the operating ratio this year, how much credence can be placed on the next year’s target of 87.8%? Even if realised, this implies only a fractional improvement in the operating ratio during 2013-14.
Finally, has the operating ratio of the Railways really on the mend as the minister would have us believe? Consider the facts. Bansal pointed out that, at 88.8% in the current year, the operating ratio had hovered over 90% since 1997-98 and had ruled even higher in some of the recent years as a sequel to the implementation of the Pay Commission award. He implied that the situation has taken a turn for the better. But, the figures do not back him up.
As noted above, the ratio had in fact been higher than budgeted and for the coming fiscal, it will be still high. That is to say, if the consistent efforts at financial discipline have yielded results, he is not confident that next year too, similar results could ensue.
However, the basis objection to the minister’s claim that OR has improved does not square with facts for the simple reason that these data for a decade and more, on a time series basis, are not comparable.
From 2005-06, among the new accounting norms, one had the effect of giving a downward bias to the operating ratio. This change pertained to the leased charges, the interest payments were part of the operational expenses and the principal portion was to figure under plan expenditure.
The effect of this change was that, in 2006-07, the OR had sagged to 78.7% and to 75.9% in 2007-08. Thus, Bansal is wrong when he says that the current fiscal’s estimated OR of 88.9% is an improvement in the working of the Railways. Of course, the ratio had soared to over 90% after the wage rise was effected and has now more or less stabilised, though it is still at a high level.
Far from achieving better working results this year, as the minister claims based on the operating ratio, the net revenue of the railways is anticipated to fall to Rs15,749 crore from the budgeted Rs22,233 crore.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}