Despite Modi government’s continuous efforts to make Indian Railways more productive the public transport medium had the “worst” operating ratio in the last fiscal. The Indian Railways has ended the financial year with its worst operating ratio in 16 years at 96.9 per cent.
Last time the operating ratio this bad was in years 2000-2002.
Former Finance Minister, P Chidambaram lashed out at the Bhartiya Janata Party (BJP) on Twitter and said, “Railways worst operating ratio in 2016-17. Previous worst in 2000-01. Both under BJP governments! Despite well- meaning minister. Problem of Railways is deeper. It cannot be run as a department of government.”
1/2 Railways worst operating ratio in 2016-17. Previous worst in 2000-01. Both under BJP governments! Despite well-meaning minister
— P. Chidambaram (@PChidambaram_IN) April 19, 2017
2/2 Problem of Railways is deeper. It cannot be run as a department of government
— P. Chidambaram (@PChidambaram_IN) April 19, 2017
The operating ratio is a key indicator of a commercial organisation’s financial health. An operating ratio of 94.9 per cent means that the railways are spending 94.9 paisa to earn 100 paisa (one rupee).
A lower figure of an operating ratio is therefore regarded better and is indicative of the better financial health of the Indian Railways.
An operating ratio of 80 per cent or lower is considered desirable in the railways.
According to the reports published in the India Express, in Rail Budget 2016, Rail Minister Suresh Prabhu had said that the impact of the 7th Pay Commission would take the operating ratio to 92 per cent in 2016-17. However, eventually, it is the pay commission’s impact being less than anticipated that prevented the ratio from sliding further, sources said.
