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Eight railway zones spent more than they earned

Source : BUSINESS_STANDARD
Last Updated: Tue, Jan 01, 2013 19:31 hrs

Of the country’s 17 railway zones, eight spent more on operations than their revenue in the April to October period. The North East Frontier Railway was the worst performer.

Of the 17, two spent almost double the amount they earned. The Metro railways in Kolkata spent Rs 3.7 for every rupee of operating earnings. The aim this year was to ensure not more than six zones made operating losses and to ensure an operating ratio (OR) across the railways of 84 per cent. This target is, clearly not going to be met. OR denotes operating expenses; it is expressed as a percentage of operating revenue.

The revenue picture would have been better if the railways had also not done a partial rollback of the passenger fare rise announced in the Budget for the coming year. The minister who announced it, Dinesh Trivedi, lost his job for doing so and his successor restored most of the earlier fares.

In April-October, the first seven months of the financial year, the Eastern and North Eastern railway zones had an operating ratio of around 200 per cent. That is, their operating expenses were twice their revenues. This, when the eastern zone — covering West Bengal, Bihar and Jharkhand — is densely populated and home to rich mineral reserves, agriculture produce and industrial products. Apart from coal, a major freight material, this zone transports iron and steel products from Durgapur and Burnpur (both in West Bengal), stone from Pakur (Jharkhand) and Jamalpur (Bihar), cement from Durgapur and a host of other merchandise, including jute, tea, textile, automobiles and agricultural produce, at various stations. Despite loading 34 million tonnes of freight (in April-October), comprising six per cent of overall freight traffic, the zone is heavily into losses.

Said a senior railway official, “Being a densely populated area with a low average per capita income, the railways is a favoured mode of transport. Running of passenger services is highly subsidised.”

The North Eastern zone, comprising Varanasi, Izzatnagar and Lucknow, among others, stretches 700 km but carried just 1.12 mt of freight traffic from April to October. This area also has a large number of short-distance passengers.

Revenue from both passenger and freight traffic between an originating and destination point is divided between zones according to the distance travelled within a zone. The originating and terminating points in a zone earns additional terminal freight charges, at Rs 20 a kg for a commodity. As freight traffic is the prime money earner, zones having no major loading/unloading points or transit are running into losses.

A lesser number of railway zones would have been better, as it helps enable efficient train operations, experts say.

The number of zones in Indian Railways increased from six to eight in 1951, nine in 1952, to 16 in 2003 and to 17 in 2010.




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