The railway ministry needs to revisit passenger and other coaching tariffs to recover operational losses in a phased manner and reduce losses in its core activities, the Comptroller and Auditor General said.
“The operating ratio during 2016-17 had deteriorated to the lowest level of 96.50 percent since 2000-01 when it was 98.34 percent,” CAG said in a report today after the Indian Railways presented its finances in both houses of parliament on Tuesday. “When actual expenditure on pension payments is taken into account, the operating ratio works out to 99.54 percent,” the report added.
The CAG recommended that the ministry fix prices based on the operational costs as one way to curtail its losses. “There is hardly any justification for not fully recovering the cost of passenger services in case of AC First Class, First Class and AC 2-Tier,” the the audit body said.
The operating ratio represents the percentage of working expenses to traffic earnings and is an indicator of the efficiency in operations of the railways. The smaller the ratio, the greater the organisation’s ability to generate profit. The operating ratio of the railways was 90.49 percent in 2015-16 and deteriorated to 96.50 percent in 2016-17.
The CAG report also said that non-availability of sufficient funds in the Depreciation Reserve Fund to replace the over aged assets is indicative of weak financial health of railways. “The huge backlog of renewal and replacement of over aged assets in the railway system needs to be addressed for safe running of trains,” it added.