Railway Budget: Structural fixes needed for operational ratio

The operating ratio will be under duress in the next fiscal and short-term fixes are insufficient to address the issue.

The decrease in commodity prices and the slowing capex spending in the economy are affecting freight traffic in the near-term. The 8 per cent lower freight revenue in FY16 could be partly explained by this. But with only nine commodities contributing to most of the revenues (coal accounts for more than 40 per cent of freight traffic), the concentration is likely to hurt in the coming years too unless the Railways expands the basket of commodities it transports.

Of the total budgeted traffic receipts for 2016-17 of ₹1,84,819 crore, around 65 per cent is contributed by freight that occupies only 25 per cent of the track space. The cross subsidised passenger trains get priority on the track, slowing the average speed of freight wagon to 30 km/ hour. Though dedicated freight corridors are expected to improve this scenario, that might take time.

Nearly 40 per cent of the tracks are being utilised beyond saturation limits (100 per cent plus capacity) and more than 65 per cent of the tracks are being utilised beyond the optimum limit (80 per cent plus capacity). The Railways has to re-align the priority for goods and passenger trains along these tracks. Increase in pricing for some of the passenger trains along these routes will help improve the revenue scenario. The Railways currently runs the suburban railway system in various States. Since the States enjoy the social and other trickle-down benefits to the economy, the Railways an consider running these through a joint venture, where the revenue as well as the expenses are shared.