Feb 26, 2016 11:30 AM IST | Source:

Railway Budget 2016-17: Prabhu fails to meet FY16 revenue tgt; raises plan outlay

The Railways has set gross revenue target for FY17 at Rs 1.85 lakh crore, up 10 percent year-on-year (YoY). Of this, freight revenue is likely to be Rs 1.18 lakh crore, while the passenger revenue target is Rs 51012 crore, up 12.4 percent

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In keeping with expectation, Railway Minister Suresh Prabhu in Budget 2016-17 increased plan outlay to Rs 1.21 lakh crore from around Rs 1 lakh crore in the previous Budget.

However, it may be a bit of a stretch especially in light of the fact that the Railways missed its revenue target this year and the overall performance can be termed as poor. Despite this, he did not increase passenger tariff this year.

1) Prabhu had expected gross traffic receipts of Rs 1.83 lakh crore in FY16, instead he garnered revenues of just Rs 1.67 lakh crore. Now, this year, he expects revenues at Rs 1.84 lakh crore, which is a 10 percent growth on Rs 1.67 lakh crore.

2) Similarly, as far as passenger traffic goes, he had expected revenues to come in at Rs 50,175 crore in FY16, but it has come in at Rs 45,384 crore. He now expects to see revenues at Rs 51,012 crore in FY17.

3) The worst hit is freight revenues. He had expected revenues from goods traffic at around Rs 1.21 lakh crore in FY16. But this has come in at just Rs 1.13 lakh crore. He has now set revenue target from freight traffic for FY17 at Rs 1.18 lakh crore, which is lower than the FY16 targeted revenue.

Overall, Prabhu has set gross revenue target at Rs 1,84,820 crore for FY17, up 10 percent year-on-year (YoY). 

In this context, it may be worth mentioning that the Railways this year will also have to bear an additional burden of about Rs 32,000 crore on account of the 7th Pay Commission.

However, Prabhu expects savings of Rs 8,720 crore in FY16, which will offset shortfall in revenue this fiscal year.

He also said the Railways is expected to meet an operating ratio of 90 percent this fiscal, against a target of 89 percent laid out in the Budget last year. For the next Budget, Prabhu says he is targeting an operating ratio of 92 percent. "The rise is because of increased expenditure on account of the 7th Pay Commission," he explained. 

Operating ratio denotes expenditure incurred for revenue earned. Thus, a ratio of 90 percent for this fiscal year means the Railway will spend Rs 90 to earn Rs 100.

Prabhu also reiterated that the Life Insurance Corporation of India (LIC) has agreed to fund Rs 1.5 lakh crore over next five years for construction of new lines and route electrification. It has already received Rs 2000 crore by way of financial assistance to decongest corridors. In his previous Budget, he had said the Railways will require investment to the tune of Rs 8.5 lakh crore over the next five years.
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