It is reported that Indian Railways 17 zones, two spend almost double the amount they actually earn. The income of another eight is less than the expenditure. In short, it is the remaining seven that are chugging the entire railway load.
The bottom three performers, generally carry very less freight traffic, and that too, for a shorter lead. This means that transit distance for the traffic is less. Contrast to that, the top performers generally carry substantial share of traffic for a longer distance.
Data relating to the first half of the current financial year show that Eastern and North Eastern railway zones had an operating ratio of 200%t. That is, their operating expenses during April to September 2001 were twice their revenues.
This, when the eastern zone covering West Bengal, Bihar and Jharkhand figures among the country’s densely populated regions. What’s more, they are also home to rich mineral reserves, agriculture produce and industrial products.
Apart from coal, a major freight material, this zone of the Railway transports iron and steel products from Durgapur and Burnpur (both in West Bengal), stone from Pakur (Jharkhand) and Jamalpur (Bihar), cement from Durgapur and a host of other merchandise, including jute, tea, textile, automobiles and agricultural produce, at various stations.
Despite loading 26.1 million tonnes of freight (in April to September 2011), comprising six per cent of the overall freight traffic, the Eastern zone is heavily into losses. It also carries heavy passenger and local traffic. On the suburban front, Howrah and Sealdah divisions of the Eastern Railway cater to the needs of large portion of the Greater Kolkata suburban passengers.
The Eastern Railway carried high-rated goods like coal and POL (petroleum oil products) for an average lead of 250 km, cement for 342 km and carried low rated commodities like food grains and fertilisers. Coal, which is also a high-rated commodity, constitutes 65-70 per cent of the total originating traffic, but had a short lead.
A senior railway official said that “Overall, the zone is deep into losses. Being a densely populated area with a low average per capita income, railways is a favored mode of transport. Running passenger services is highly subsidized.”
The revenue for passenger and freight traffic between the originating and destination point is divided proportionately according to the distance traveled within a particular zone. The originating and terminating points in the zones earn additional charges of terminal charges. It is INR 20 a kg of the commodity.
Still there are zones like East Coast, North Central, South Central, South Eastern, South East Central, Western and West Central, which have an operating ratio less than 100% meaning, their operating expenditure is less than their income.
South East Central zone, with Bilaspur, Raipur and Nagpur divisions under it, had an operating ratio of 61.4% in April to September. The average lead of the traffic carried was around 680 km through this zone. By and large, all the bulk commodities except POL are carried through this zone. All high-rated commodities for example, coal in class 140 and iron ore in class 200 have their loading point in this zone. Class 200, the highest freight rate, has a charge which is double the operational cost of carrying that commodity.
To these dismal statistics, the concept of operating ratio in the railways is just an eye wash. According to a senior Railway official, there is lot of financial jugglery that happens to project a healthy OR.”
The official noted that “Sometimes, payments to contractors are deferred. This leads to lesser expenses in record, hence lesser and projection of healthy operating ratio. If the correct assessment of one’s financial health is not made, it is very difficult to address the issues.”
The Railways had an operating ratio of 75% in 2007-08. This fetched it a huge surplus of INR 13,431 crore mostly owing to a large increase in loading of the railways and the effect of spending INR 17,000 of non lapsable Special Railway Safety fund on over-aged assets undertaken in 2001.
At present, the Indian Railways is at one of its low points. Its 2009-10 operating ratio is 95%, while the surplus of just INR 7.5 million. As for the passenger and freight traffic, it picks up in the second half of any financial year, notes Mr R Sivadasan a former financial commissioner with Railways. He added that “Overall, by the end of the year, the railways will have an OR of around 90 to 92%. The ideal OR is around 80% or less. Now, that is now out of question.”
(Sourced from ET)
