The Railway Board said that the operating ratio of railways may improve to 96.96%

A parliamentary panel raised concerns over the losses incurred by the Indian Railways passenger services especially due to its social service obligation and suggested that the national transporter rationalise both freight and passenger fares. The Standing Committee on Railways on ‘Demands for Grants (2020-21) of the Ministry of Railways’, which submitted its report in the current session of Parliament, has stated that there is a need to revisit the components that constitute social service obligations of the national transporter. (Also Read: Budget 2021: Operating Ratio To Improve To 96.96%, Says Railway Board Member )

“The predicament of the railways is that the profits earned from freight business are utilised to compensate for the losses incurred on passenger and other coaching services, thereby adversely affecting both freight and passenger business. It, therefore, becomes imperative that both freight and passenger fares are rationalised prudently,” it said.

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It said that the operational efficiencies of the railways in both freight and passenger business have to be leveraged to a greater extent so as to retain the customer base and enhance revenues. The railways, in its response, said the National Institute of Public Finance and Policy (NIPFP) has been engaged to carry out a study on ‘Developing a mechanism for computing the value of Social Service Obligations (SSO) being borne by Indian Railways in 2017’.

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