THE economic slowdown and a slippage in controlling ordinary working expenses have largely deprived Indian Railways of the benefits of a fiscal consolidation drive begun more than a year ago. The interim Budget 2014-15 along with the vote-on-account for the first four months presented by railway minister Mallikarjun Kharge in the Lok Sabha on Wednesday left passenger fares and freight rates untouched.
It showed passenger earnings rising 19.7% in FY14 against the budgeted 35%. Freight revenue, which accounts for roughly two-thirds of railways’ gross traffic receipts (GTR), is seen growing at 10.2%, a trifle more than 9.7% estimated previously.
Despite the 20% weighted average hike in passenger fares announced in January 2013 and the subsequent introduction of automatic six-monthly adjustment of tariffs to factor in fuel costs, the operating ratio (OR) has only deteriorated. The OR’s differential with 100 shows the size of funds with the transporter for investing in much-needed expansion after meeting ordinary expenses and unavoidable replenishment of assets.
Against the budgeted 87.8%, the OR for 2013-14 is now projected at 90.8%. Due to a R4,000 crore rise in pension bill to R26,700 crore, the OR is not envisaged to improve much next fiscal either with the figure estimated at 89.8%. Kharge also revised the OR for 2012-13 to 90.2% from 88.2% previously estimated — all these figures compare poorly with the best OR of 75.94% achieved in 2007-08, helped by a sharp rise in incremental freight loading to over 60 million tonnes a year since 2004-05.
Despite providing Rs 1,000 crore less (as against the budheted Rs 7,500 crore) to the depreciation reserve fund (DRF), excess of receipts over expenditure for 2013-14 is now pegged at just Rs 7,943 crore as against the budget estimate of Rs 13,146 crore. (DRF is used for replenishing existing assets). That means the national transporter is left with nothing after Rs 5,268 crore being spent on debt servicing and a measly Rs 2,675 crore provided to the development fund. The revenue-creating Capital Fund, to which flows of Rs 5,434 crore was envisaged in previous budget, has been completely starved. Of course, dividend payment is set to be Rs 7,943 crore as against Rs 6,249 crore estimated in the previous budget.
“There have been times were our fund balance has been in the negative. What we project for the next year (89.8% OA) is very realistic