Mar 3, 2017

Indian Railways mulls new performance index

A committee of EDs from its budget, finance efficiency and research departments was formed to look at the best corporate practices and suggest a new ratio. | Photo Credit: K.V. Poornachandra Kumar

Operation ratio of 109% or spending ₹109 to earn ₹100, was cause for concern.
The Indian Railways is mulling a new metric to measures its performance at a time when it is staring at a five-year low operating ratio by the end of this financial year.

The Railways formed a committee of executive directors from its budget, finance efficiency and research departments, last week to look at some of the best corporate practice and suggest a new financial ratio.

The financial performance of the Indian Railways is measured in operating ratio which is expected to be at a five-year high of 94.9% in 2016-17. Till December this year, the Railways’ operating ratio in 2016-17 stood at 109% which is expected to improve by March this year. This means, the Railways spent ₹109 to earn ₹100 from April-December 2016. A lower operating ratio means better efficiency.


Financial health

“A committee has been formed to work out another index, looking at both the government and the private sector, which reflects the financial health of the Indian Railways,”a senior Railway Ministry official said. “The operating ratio reflects the true reflection of the Railways’ finances only by the end of the financial year. So, we have asked the committee to work out a better financial ratio than the operating ratio reflecting the correct financial and professional health.”

Another Ministry official said the committee has been asked to submit its report within a month, adding that it may also hire a private agency to take help in mulling a new performance indicator.

“The operating ratio is a very different way of measuring the financial health and is not the industry-standard. In the corporate sector, you have various ways of measuring a company’s operating performance such as the Earnings before interest, tax, depreciation and amortization (EBITDA). So, we need a new metric for the right comparison,” a third Railway Ministry official said.

Pay increases

The Railways’ finances took a hit this financial year due to the Seventh Pay Commission’s pay hike recommendations, Railway Ministry officials said.

“There was a hit of ₹30,000 crore on our finances due to the Seventh Pay Commission. When the last two Pay Commissions were implemented, the operating ratio deteriorated by 5-10%. However, this year we will be able manage an operating ratio which will be marginally higher at around 95%,” Railway Board Chairman A.K.Mital had said at a press conference on February 1 when Finance Minister Arun Jaitley presented the first general Budget incorporating the Railway Budget.

“In order to be meaningful, the (financial) ratio should be representative of the operations, be as comprehensive, as reasonably possible and least subject to arbitrariness,” a 1998 book titled ‘Readings in Indian Railway Finance’ edited by the then Rites Group General Manager K.B.Verma said.

“While the existing concept of Operating Ratio on Indian Railways more or less satisfies the first criteria, it does not meet the other two criteria. It is, therefore, not a satisfactory index of financial performance.” - The Hindu

 

NEXT POST

EMPLOYEE NEWS CENTER

READ MORE -

Rail News - Public service (4210) Rail News - Public service (3498) Rail News - Rail Employee (2318) DIVISION - JABALPUR (357) Rail News - Rail Development (316) News - Spl Train (262) News - General (234) DIVISION - BHOPAL (202) Rail News - Job - Career (200) Rail news - Metro (193) Rail News - Circulars (138) DIVISION - HUBLI (128) DIVISION - MORADABAD (122) Office Order (105) DIVISION - ALLAHABAD (93) World Rail News (85) Rail news - Public Alert (79) News - Loco Pilot (73) Rail News - Rail Budget (69) HIGH SPEED RAIL (68) Rail News - 7th Pay Commission (62) Rail News - New Train (61) Improvement in Facilities (58) Rail News - Railway Safety (58) Accidents (55) Rail Development (54) Rail news - World Rail (49) Rail News - Tourism (38) News- Railway Exam Result (35) Rail News - Freight Services (35) DIVISION - Delhi (34) Public Interest (33) Rail News - Sports (32) Trade Union (32) Award (30) Bonus (PLB) (30) PIB (29) Bullet train (28) new line (26) IRCTC (25) News - Dearness Allowance (24) Station Master (23) TATKAL TICKET (22) RPF / RPSF (21) News - Railway Employee (20) Railway News - Metro (20) Complaint and Suggestions (19) Rail News - Security (19) News - Catering (18) News - Job - Career (18) Railway Pensioners (18) Mumbai local (17) Railway time table (17) News - New Tech (16) ‘Premium’ Special Trains (15) Circulars - Govt of India (14) Rail News - Railway Revenue (14) Rail news - Employment Notification (14) Railway News - Delhi Metro (14) Know About (13) Rail News - Special Train (13) Scam (13) Railway Board (12) Railway Joke (12) Catering Related Complaints (11) DIVISION - RAIPUR (11) Freight Corridor (11) Rail News - Security (11) Dedicated Freight Corridors (10) AISMA (9) Rail News - New Rail Line (9) Budget (8) DIVISION - Ambala (8) Employee News (8) News - Exam Result (8) PHOTO (8) Passenger Amenities (8) Premium Air-Conditioned (8) Railway pass (8) World Rail - China (8) fares hikes (8) semi-high speed (8) INCOME TAX (7) Indian Railway History (7) Night Duty Allowance (7) Rail Accidents (7) Rail budget (7) online tickets (7) Central Railway (6) International Railway (6) Mono Rail (6) Mumbai Metro (6) News - Budget (6) Public Grievances (6) Rail Fares (6) Railway Safety (6) Ticket Booking (6) World Rail - Japan (6) extra coaches (6) guard (6) Always Important (5) Drinking Water (5) HELP (5) Holiday Trains (5) IRCON (5) LOCOMOTIVE (5) Zone - Western Railway (5) booking counters (5) hi-tech (5) macp (5) Coaches (4) Food plazas (4) IMPORTANT RULE (4) Mumbai (4) News - Railway Rule (4) RAIL TEL (4) Rail History (4) Rail Neer (4) Rail News - Business (4) Rail News - Rules (4) Railway Minister (4) Train Cancellation (4) World Rail - Pakistan (4) Zone - South Central Railway (4) e-ticket booking (4) escalators (4) AIR - RAIL (3) Booking - Parcel (3) CCTV (3) Children Education Allowance (3) DOUBLE DECKER TRAIN (3) Electrification (3) Konkan railway (3) Medical Allowance (3) Member Engineering (3) Modal Question Paper (3) News- Railway Exam (3) PASS (3) Question Bank (3) Rail News - China (3) Rail fare hike (3) Suvidha Train (3) TRANSFER POLICY (3) VAISHNO DEVI (3) reservation (3) tatkal ticket (3) Booking - Luggage (2) D & A RULE (2) Extension of train services (2) Khumbn Mela (2) LDCE (2) Leave Rule (2) MATHERAN (2) MOBILE APPS (2) Minister of State for Railways (2) National Rail Museum (2) News - Rail Road (2) News -World Film (2) OROP (2) Passenger Reservation System (2) Police help desk (2) Provident Fund interest (2) Rail News - Goods Train (2) Railway Protection Force (2) Railway Proud (2) Railway Stations (2) Retiring Rooms (2) Revenue earnings (2) South Eastern Railway (2) Zone - East Central Railway (2) Zone - N E RLY (2) Zone - Northern Railway (2) Zone - Southern Railway (2) new pension scheme (2) ALER (1) Air Travel (1) DIVISION - CENTRAL RAILWAY (1) DIVISION - MADURAI (1) DIVISION - VIJAYWADA (1) Directory (1) Division - Rangia (1) FOOT OVER BRIDGE (1) FORMS (1) Government Railway Police (1) House Rent Allowance (1) Interesting Facts (1) JAIPUR (1) LARGESS (1) LONDON (1) Lifeline Express (1) MST (1) Measures Against Fire (1) Medical Care (1) Ministry of Railway (1) News - TV (1) Passenger Security (1) RDSO (1) Rail - Roko (1) Rail Bridges (1) Rail News - Privatization (1) Rail News - Bengali (1) Rail News - Consumer Forum (1) Rail Tariff (1) Rail Tenders (1) Rail e-tickets (1) Railway Act (1) Railway Quarter (1) Railway Week (1) Rath Yatra (1) Road over Bridges work (1) SCRA (1) SKY BUS (1) Sainagar Shirdi (1) Suburban trains (1) Swadeshi (1) TRAVELLING ALLOWANCE (1) Ticket Examiner Staff (1) Track Man (1) WhatsApp (1) World Rail - New York (1) World Rail - Russia (1) World Rail - USA (1) World Rail - Washington (1) Zone - E RLY (1) Zone - N C RLY (1) Zone - North Western Railway (1) Zone - Northeast Frontier Railway (1) Zone - S E Railway (1) fire-fighting equipment (1) mobile ticket booking (1) railway station (1) smart card (1) wagon factories (1)

7th Pay Commission & Employee News Center

Followers