According to an RTI response, the Indian Railways improved its operating ratio to 97.45 percent in the fiscal year 2020-21 from 98.36 percent the previous year due to limited train services for the most of the year, no subsidies or concessions, and significantly tightening of expenditures.
The operating ratio is the amount spent for every Rs 100 earned. The smaller the number, the better. It is used to assess an organization’s operational efficiency. The higher the operational ratio, the fewer financial resources are available for expansion and growth. The reduction in the Railways’ operating expenses means that the national transporter was able to reduce its spending and compensate for the decrease in passenger traffic through income produced by freight operations.
However, the austerity efforts of Indian Railways were assisted by the fact that it did not run the heavily subsidised passenger section at full capacity in 2020-21. With the exception of a handful, the Railways ran about 65 percent of trains with no discounts for any category of passengers until the end of the year, saving crores. It also witnessed a significant decrease in pension liabilities, with the national transporter reaching an agreement with the finance ministry to postpone this cost.
The electrification of important routes also saved the Railways Rs 9,500 crore in traction costs during 2019-20. Similarly, savings of Rs 4000 crore were realised through duty rationalisation and optimization. In addition, the Railways saved Rs 3,000 crore last year compared to 2019-20 by rationalising and optimising contracts and procurement of goods and services.
The Railway Ministry said that freight loading in 2020-21 was 1,232.63 million tonnes, a 1.93 percent increase over the previous fiscal year’s total of 1,209.32 million tonnes. Revenue from freight loading for Indian Railways was Rs 1,17,386 crore in 2020-21, a 3% increase from Rs 1,13,897.20 crore in 2019-2020.
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Hello, my name is Anuj Boruah. I am quite interested in writing about current events in business, finance, and the economy. I work as a newswriter at Reviewminute.