THE GIST of Editorial for UPSC Exams : 04 December 2019 (The railways lose steam (Mint))

The railways lose steam (Mint)

Mains Paper 3: Economy
Prelims level : Operating ratio
Mains level : Challenges for boosting up railways income

Context:

• The Comptroller and Auditor General has flagged deteriorating finances of Indian Railways.
• The national rail carrier’s so-called “operating ratio" (OR) reached a decade’s low point in 2017-18, when the national transporter spent ₹98.44 to earn every ₹100 (an OR of 98.44).

A sharp decline:

• This is a steady decline from 2015-16, when the Railways spent ₹90.49 to earn ₹100.
• Rail Bhavan now uses almost all the money it makes on hauling freight—about 95% of these profits—to subsidize passenger traffic.
• In some categories of travel, the subsidy shoots up to 70% of the cost of ferrying a passenger.
• Dynamic pricing of fares for air-conditioned coaches has helped cover costs, but ordinary passengers still get rides that are almost free.
• The government must heed the auditor’s warning on passenger privileges exerting an unsustainable burden on the Railways.

How Indian Railways earns money has a bearing on how it is spent?

• A rising proportion goes into running trains, leaving a shrinking slice for upgrading the network.
• The state of railway infrastructure in the country, that is a bad sign.
• The auditor has also found the Railways pushing forward capital expenditure for which money has already been borrowed. This is disconcerting as well.
• The carrier has been consistently losing market share in the cargo business to road haulage, despite enjoying exclusive rights to transport such commodities like coal.

Conclusion:

• Rail Bhavan has ambitious plans laid out to modernize the network and haul it into the 21st century.
• This mode of transport remains relevant to India’s future, given that it is relatively clean—thanks to track electrification—and could play a major role in India’s commitments towards mitigating climate change.

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Prelims Questions:

Q.1) With reference to the Development Council for Bicycle, consider the following statements:
1. It has been set up by the Union Ministry of Finance.
2. It has been setup for vision planning in design, engineering and manufacturing of lighter, smarter, value added, safe and faster premium bicycles which are comparable with global standards for exports and domestic market.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: B
Mains Questions:
Q.1) How Indian Railways can boost up their earning as well as to increase the revenue?