Indian Railways Earnings Margins Fall To Worst In 10 Years, Says Auditor

A measure of expenditure against revenue, the operating ratio shows how efficiently the railway is operating and how healthy its finances are.

The Railways has also been unable to meet its operational cost of passenger services.

New Delhi:

The Railways recorded an operating ratio of 98.44 per cent in 2017-18 which is the worst in the previous 10 years, the Comptroller and Auditor General (CAG) has said in a report tabled in Parliament on Monday.

A measure of expenditure against revenue, the operating ratio shows how efficiently the railway is operating and how healthy its finances are. An operating ratio of 98.44 per cent means that the Railways spent Rs 98.44 to earn Rs 100.

The national auditor in its report on the railways' finances, said that the railways would have ended up with a negative balance of Rs 5,676.29 crore instead of a surplus of Rs 1,665.61 crore but for the advance received from NTPC and IRCON.

"The Indian Railways' operating ratio at 98.44 per cent in 2017-18 was the worst in the last 10 years," the national auditor, Comptroller and Auditor General (CAG), said in a report tabled in Parliament on Monday.

"Exclusion of this advance would otherwise have increased the operating ratio to 102.66 per cent," the auditor said.

The Railways has also been unable to meet its operational cost of passenger services and other coaching services. Almost 95 per cent of the profit from freight traffic was utilised to compensate for the loss on operation of passenger and other coaching services, it said.

The audit analysis of the finance accounts of Indian Railways revealed a declining trend of revenue surplus and the share of internal resources in capital expenditure. The net revenue surplus decreased by 66.10 per cent from Rs 4,913.00 crore in 2016-17 to Rs 1,665.61 crore in 2017-18.

The share of internal resources in total capital expenditure also decreased to 3.01 per cent in 2017-18.

"This had resulted in greater dependence on Gross Budgetary Support and Extra Budgetary Resources," the CAG said.

The CAG also recommended that railways need to take steps to augment their internal revenues, so that dependence on gross and extra budgetary resources is contained.

"Under provisioning for depreciation is resulting in piling up of ''throw forward'' of works concerning renewal of over aged assets. There is an urgent need to address this backlog and ensure timely replacement and renewal of old assets," it said.

It also advised the railways to avoid creating new funds without any "justifiable reason".

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