INDIAN RAILWAYS is in the red and it is going to be a huge challenge to pull it back into black for the Railway Minister Mamata Banerjee, who will present her third Rail Budget on Friday. Railway Budget 2011 is perhaps going to be the toughest one for the Railway Minister.
This is because ten out of sixteen zones of Indian Railways have reported losses in the past nine months between April and December 2010. Surprisingly, only six railway zones actually managed to have operating ratios below 100 per cent. Only East Coast Railway has emerged as a top performer with an operating ratio of 45.9 per cent.
Railways has not increased passenger fares for a decade, and hikes in freights have been avoided in the past four rail budgets. The Union Railway ministry led by Mamata Banerjee may find it difficult to announce any elaborate plan, new measures for passengers, or an infrastructure push in the upcoming railway budget due to the resource crunch.
Railways Operating Ratio i.e. money spent to earn Rs 100 is Rs 125, which is a key indicator of its financial health, is on an alarming rise in the past nine months as compared to the traditional average of Rs 75. Industry sources say that factors such as decreased passenger and freight earnings have contributed to the increase in expenditure.
Indian Railways operating ratio was 96 per cent in 2001-02, and improved greatly by falling down to 75.9 per cent in 6 years in 2007-08. But it again worsened to 90.5 per cent in 2008-09 and further to 94.7 per cent in 2009-10.
Indian Railways is likely to miss this fiscal year’s revenue target of Rs 94,764.95 crore because till January Railways had earned around Rs 76,200 crore, falling short by over Rs 17800 crore. Railway financial health recorded a steep decline with its reserves falling from Rs 19,000 crore in 2007-08 to Rs 5,000 crore in May 2010.