Budget 2021: Operating Ratio To Improve To 96.96%, Says Railway Board Member

The operating ratio is a major indicator of an organisation's finances
The operating ratio is a major indicator of an organisation's finances

Railway Budget 2021: Indian Railways operating ratio is expected to improve to 96.96 per cent by the end of the current financial year despite COVID-19-related disruptions, said Naresh Salecha, Member, Railway Board. The operating ratio in railways means expenses as a portion of the revenue or the amount spent on every rupee earned by the railways. The Railway Board member said that as far as the finance of Indian Railways is concerned, its operating ratio was pegged at 96.15 per cent for 2020-21. Finance Minister Nirmala Sitharaman, while presenting Budget 2021 on February 1 in the Lok Sabha, announced an allocation of Rs 1.1 lakh crore for Indian Railways, out of which Rs 1,07,100 is for capital expenditure.  (Also Read: Budget 2021 Allocates ₹ 1.1 Lakh Crore For Indian Railways: What You Need To Know )

The operating ratio is a major indicator of an organisation's finances. "This is lower than the revised estimate of 98.36 per cent for 2019-20. A lower operating ratio can be attributed to lower expenditure on account of a fall in working expenses as well as a sharp decline in pension liabilities. "Pension liability was budgeted at Rs 53,160 crore in the beginning of the current fiscal. However, the revised estimate stood at Rs 523 crore as the national transporter made an arrangement with the finance ministry to defer this expense," he said.

The Railway Board member said that 2020 was an “exceptional” year due to the coronavirus pandemic as a result of which passenger trains did not operate. "Our projections hence went haywire. Before this, we have been taking full pension liabilities. When we could not meet such liabilities, we came to an arrangement with the finance ministry so that a separate fund could be given to us, which we have to repay to the ministry. In a couple of years, we have to pay it back," he said.

As part of measures announced for railway infrastructure in Budget 2021, the Indian Railways network will witness 100 per cent electrification of rail broad gauge routes will be completed by the month of December 2023. The government also expects that that the western dedicated freight corridor, as well as the eastern dedicated freight corridor, will be commissioned by June 2022.