Operating ratio will improve'

Published : Apr 06, 2012 00:00 IST

Vijaya Kanth: "It's a very minimal fare hike."-SHASHI ASHIWAL

Vijaya Kanth: "It's a very minimal fare hike."-SHASHI ASHIWAL

Interview with Vijaya Kanth, Financial Commissioner, Railways.

THE Financial Commissioner (F.C.) of the Indian Railways is associated with the Railway Budget from conception to formulation. Following the presentation of the Railway Budget, Frontline caught up with the F.C. (Railways), Vijaya Kanth, in her sparsely furnished office in Rail Bhavan, New Delhi. The Budget has given us a very clear focus and direction on modernisation, safety and capacity augmentation, she said. Excerpts from the interview:

How do you justify the revision in passenger fares?

First of all, we have not raised passenger fares for the past eight years. Freight cannot continue to subsidise passenger traffic. I think now the general opinion is that passenger fares should go up. Our cost of input has gone up and the composite weighted index of all the inputs has gone up by 103 per cent. But in the cost of operation we have not increased the tariff, and we are subsidising passenger traffic for nearly Rs.21,000 crore, as per the latest estimates.

Will the higher passenger fares not hurt the aam admi and those poor workers who commute over short distances to work?

As the Minister said, we are charging only two paise per km for ordinary second class or three paise or five paise per km. We have taken into account the needs of the common man, the people who cannot afford costly train travel, and that is why it has been kept to the absolute minimum. We have taken a conscious decision that it should not be too much of a burden on the common person. It means a very minimal fare hike. On account of the fare hike, the yield would be around Rs.4,000 crore a year.

Why was the freight rate adjustment made prior to the Budget?

As our input costs have been going up right through the year, we had planned a hike in freight rates some months ago. By then the elections to a few State Assemblies were announced and we could not implement it because of the model code of conduct.

How do you account for the shortfall in the revenue target and the expenditure overshoot in fiscal 2011-12?

Our earnings of Rs.1,03,000 crore are still more than our expenditures estimated at Rs.75,000 crore in 2011-12. We have not changed our freight earnings, on which we expect to realise Rs.68,200 crore this fiscal. Expenditure has overshot our estimates by Rs.2000 crore, which was mostly staff-related, on establishment, maintenance for assets and purchases for stores.

What do you say on the fuel adjustment component mentioned in the budget?

We have only flagged off the issue. The fuel adjustment component is just a concept. But look at the airlines. At one point of time this fuel cost adjustment has to be made, given the volatility in diesel and power purchase prices.

Why has the Railways gone for borrowing from the government?

In 2011-12, our expected earnings from internal generation of resources did not come through. So there was a resource gap which we have to bridge; we had to take a loan of Rs.3,000 crore from the Finance Ministry.

Passengers suffer in the absence of even modest amenities. What is your view on this?

In the 2012-13 budget, we have provided Rs.400 crore for passenger amenities over the current fiscal, for improvement of stations, travel comfort and better arrangements to passengers in terms of requisite amenities. All the money comes from our development fund. Whatever the internal generation of resources, they will all be put in the development fund. Alongside, there have also been a lot of improvements in our safety standards. We need to improve more upon our safety and that is why a high-level safety committee has also been appointed.

Will you be able to reduce the operating ratio by 10 points, from 95 to 84.9 per cent?

It is feasible because we have projected our earnings, and expenditures have also been provided for adequately. So we do expect our operating ratio to improve. It is not that first we set the operating ratio and then work backwards. We worked out our earnings projections, expenditure and our fund balance under the Depreciation Reserve Fund (DRF), other commitments and pension liabilities; after taking all these into account we worked out the operating ratio and found out that it looked healthy.

Sign in to Unlock member-only benefits!
  • Bookmark stories to read later.
  • Comment on stories to start conversations.
  • Subscribe to our newsletters.
  • Get notified about discounts and offers to our products.
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide to our community guidelines for posting your comment