Railways Records Operating Ratio of 96.9%, Worst in 16 Years

Operating ratio indicates an organisation’s financial condition. Clearly, railways should be very worried.  

Indian Railways has ended the financial year with its operating ratio at 96.9 percent, its worst in 16 years, The Indian Express reported.

Operating ratio is a vital parameter for judging an organisation’s financial condition.

The figure, in fact, was actually expected to be a lot worse. By November last year, the estimated operating ratio reached an all-time high of 114 percent.

The Railways had expected to spend Rs 1.21 lakh crore, but numbers on 31 March showed that it had recorded an expenditure of less than Rs 1.19 lakh crore. This allowed room for improvement of the operating ratio.

Operating ratio can be defined as the money spent to earn every hundred rupees. An indicator of the organisation’s financial health, lower the operating ratio, better it is for the organisation.

The Indian Railways recorded its worst operating ratio for the year 2000-2001 at 98 percent but subsequently improved it to 96 percent the following year.

While the Railways has formed an internal committee to look into the issue, an international consultancy has also been hired to help in the framing of a new performance index.

In his Budget address last year, Union Minister for Railways Suresh Prabhu had projected an operating ratio of 92 percent. Earlier this year, Minister of State for Railways Rajen Gohain had in a written reply in the Lok Sabha estimated the figure for 2016-17 at 94.9 percent.

(With inputs from PTI.)