In the Pandemic-Affected Fiscal Year of FY21, Railways Boosts Their Operating Ratio to 97.45%

According to an RTI response, the Railways improved its operating ratio to 97.45 percent in the fiscal year 2020-21 from 98.36 percent the previous fiscal year, owing to limited train services for most of the year, no subsidies or concessions, and extreme cost-cutting.The operating ratio is the amount of money spent for every ₹100 that is earned. The smaller the number, the better. It is used to evaluate a company’s operational efficiency. The smaller the financial resources available for expansion and growth, the higher the operating ratio.

Because the Railways’ operating costs have improved, the national transporter has been able to reduce its spending and compensate for the lack of passenger traffic by generating cash from freight operations.

In response to an RTI request from Madhya Pradesh-based activist Chandra Shekar Gaur, the Railway Board stated, “The operating ratio for the year 2019-2020 was 98.36 percent… the operating ratio for 2020-21 has been assessed at 97.45 percent on a provisional basis.”

The improved figures, according to a railway spokeswoman, are due to the national transporter’s stringent expense management, which is a “combination of actions aimed at maximising revenue receipts while decreasing controllable revenue expenses.”

“Expenditure was strictly monitored and limited to ensure that train operations were not disrupted.” Investing in electrification over the last seven years has allowed the Railways to save money on diesel while also becoming a more environmentally conscious company.

“Other cost control methods included the tight economy and austerity measures, improved manpower planning, greater asset usage, inventory management, and so on,” the spokesperson said, adding that the actions were bolstered by rising freight revenues.

The Railways, on the other hand, were helped in their austerity measures by the fact that they did not operate the heavily subsidised passenger sector at full throttle in 2020-21.

With the exception of a few trains, the Railways ran roughly 65 percent of trains without any incentives for any type of passengers till the end of the year, saving millions of dollars. It also saw a significant reduction in pension liabilities, thanks to an agreement between the national transporter and the finance ministry to defer this cost.

The Railways will save ₹9,500 crores in traction costs in 2019-20 as a result of the electrification of main routes. Similarly, duty rationalisation and optimization resulted in savings of ₹4000 crores.

By rationalising and optimising contracts and procurement of goods and services, the Railways saved ₹3,000 crores last year compared to 2019-20.

“Other revenue-enhancing measures include increasing traffic throughput gradually, expanding the commodity basket, effective and innovative marketing strategies to capture more traffic by business development units at all levels, optimum utilisation of existing rail infrastructure, including rolling stock, productivity and efficiency improvements, and a focus on increasing the number of passengers.”

Despite the problems provided by the COVID-19 outbreak, which resulted in a negative increase in freight loading during the lockdown, the Railways recorded high freight loading in 2020-21.

The Railway Ministry reported that freight loading in 2020-21 was 1,232.63 million tonnes, up 1.93 percent from 1,209.32 million tonnes the previous fiscal year.

Revenue from freight loading for Indian Railways increased by 3% to ₹1,17,386 crore in 2020-21, compared to ₹1,13,897.20 crore in 2019-2020.