New Delhi: Indian Railways has projected conservative estimates for freight revenue and operating ratio for the next fiscal year citing the depressed overall economy, after having achieved its healthiest operating ratio in years in 2012-13.
Operating ratio, the money the railways spends to earn every Rs.100 and used as a barometer of the network’s efficiency, stayed above 90% till 2011-12. In 2012-13, the ratio improved to 88.8% from 94.9% in the previous fiscal year, but for 2013-14, the railways is only targeting a modest improvement to 87.8%.
Railways minister Pawan Kumar Bansal indicated this was due to the depressed economic outlook for the country.
“While the railways undoubtedly contribute significantly to the growth, progress and development of the country and is a powerful vehicle for mainstreaming remotest corners of the nation, the growth of the railways itself is inextricably linked with the overall growth of the country,” he said during his presentation of the railway budget for 2013-14 on Tuesday.
The Central Statistics Office has projected India’s economy to grow at 5% in the fiscal ending 31 March. The government expects economic growth to accelerate to 6.5% next fiscal year.
Railway board chairman Vinay Mittal later addressing reporters said there were no tall claims in the budget. “What we are telling is absolutely feasible. That is the focus of the budget,” he said.
Mittal said the railways was able to achieve significant improvement in its health through fiscal discipline. The railways reduced working expenses by Rs.1,000 crore against the budgeted Rs.84,400 crore for 2012-13, and repaid the Rs.3,000 crore loan it took from the finance ministry in 2011-12.
Vijaya Kanth, financial commissioner in the railway board, said the ministry ensured control over spending across departments and did not enter into fresh liabilities. “We adopted the formula that money you don’t have you don’t spend,” he said.
On the revenue front, a shortfall in freight and passenger traffic led to a decline in revenue generation from the budgeted amount. While revenue from passenger traffic rose 15% to Rs.32,500 crore, revenue from freight traffic increased 23.6% to Rs.85,956 crore.
For 2013-14, the railways has set modest targets for passenger and freight traffic and revenue growth. It expects freight revenue to grow 8.8% to Rs.93,554 crore and passenger revenue to grow 30% to Rs.42,210 crore.
Manish Agarwal, executive director, PricewaterhouseCoopers, said the Railway Budget is most practical under the present circumstances. “The railway minister has avoided creating any euphoric expectations about freight revenue and volume increases, thus tempering down expectations,” he said, adding that fuel pass-through in the freight segment is the economically sensible thing to do.
Though the railways opted for more realistic assumptions, it allocated less funds than budgeted in 2012-13 to the Depreciation Reserve Fund that’s used for replacement of rolling stock such as bogies and wagons, as well as for the development and the capital funds.
The railways, however, created a new fund called the Railway Liability Reserve Fund and allocated Rs.4,163 crore to meet the liabilities for debt servicing of Japan International Cooperation Agency and the World Bank loans taken for the Dedicated Freight Corridor project.
Ragini Verma contributed to this story.