Indian Railways may miss revenue target this fiscal

With just about a week left for the current financial year to end, Indian Railways is going full steam to meet its year-end target. It is working overtime to boost its revenue in March by close to 20%.

Though, it might be an uphill task as the incremental income generation has turned negative as of February-end.

"The financial position of the Railways is very tight and efforts need to be intensified to achieve the earnings target as an amount of Rs 34,168 crore is yet to be achieved," as per a record of the recent meeting at the Railway Board where financial advisors of all Railway zones were directed to take extra efforts to reach closer to the targets. In this regard, Action Taken Reports have been demanded within a month's deadline.

The government had initially set a revenue target of Rs 1.89 lakh crore for the year, which was later revised downwards to Rs 1.80 lakh crore.

Despite recent moves to turn frugal, Railways continues to be operationally inefficient, the meeting noted.

"Operating ratio at the end of February 2018 has crossed 100%. Efforts to be made to ensure that the earnings are increased and working expenses curtailed," the minutes said.

Operating ratio is a company's operating expenses as a percentage of revenue. This is bad news as operating ratio crossing 100% means that Railways's incremental income is negative as it is now spending more than Rs 100 to earn that amount.

The zonal financial advisors have also been directed to ensure that general managers are kept apprised of the financial positions through frequent meetings and financial reviews.

There is a massive intake of workers, rising pension liability, but income is way behind targets. Indian Railways is up for some tough times and difficult choices as the financial year comes to an end. In the meeting of the department's principal financial advisors held at the Railway Board office, these were the facts discussed.

Among the reasons cited in the meeting for inability to earn enough sundry income was failure to firm up or renew contracts for leasing out spaces for parcels and the finance heads were directed to strictly monitor this area of potential revenue.

With massive recruitment drive to fill up about 1 lakh vacancies already kicked off even as pension liability is mounting would further strain Indian Railways's financial position."There is going to be huge recruitment in next financial year. Principal Financial Advisors must exercise vigil on budgeting impact," the minutes of the meeting said.

CHUGGING SLOWER

• The government had initially set a revenue target of Rs 1.89 lakh crore for the year, it was later revised downwards to Rs 1.80 lakh crore
   
• Zonal financial advisors have been directed to ensure that general managers are kept apprised of the financial positions through frequent meetings and financial reviews