Indian Railways' FY22 operating ratio: 107.39%

11 Aug 2023 CW Team

The latest Comptroller and Auditor General (CAG) report has brought to light Indian Railways' financial performance for the fiscal year 2021-22, revealing an operating ratio of 107.39%. This figure, which represents the ratio of working expenses to traffic earnings, signifies a decreased capacity to generate a surplus. The report, presented in Parliament, offers an analytical overview of Indian Railways' finances and accounts, using the audited accounts for the year ended March 31, 2022.

The CAG's report highlights a loss of $682.69 billion across all classes of passenger services in the fiscal year 2021-22. However, the auditor pointed out that this loss demonstrated a reduction compared to the previous year.

Notably, the entire profit of $391.96 billion garnered from freight traffic was allocated to cross-subsidize and compensate for the losses incurred through passenger and other coaching services. During 2021-22, the passenger operations' loss of $320.73 billion remained uncovered, according to the report.

The CAG's report underlines that the operating ratio of 107.39% in FY22 marks a significant increase from the 97.45% recorded in the previous fiscal year, indicating a diminished ability to generate surplus. This inability to generate net surplus during 2021-22 contrasts with the performance in 2020-21, where the operating ratio was 97.45%.

The report sheds light on the financial challenges faced by Indian Railways, particularly in the context of passenger services. The operating ratio serves as a key indicator of the railways' financial health, and the upward trend raises concerns about its ability to effectively manage expenses and generate revenues.

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