On the eve of the Railway Budget, Prospero Tree enumerates some startling facts about the financial ill-health plaguing the Indian Railways. Mr. Suresh Prabhu has a herculean task cut out to fix the Railways and present a "turnaround" Railway Budget.

1. Over the years, Indian Railways has ceded market share to highways – Its market share declined from 90% in FY51 to 30% in FY08.
2. The key drivers of its revenue, freight charges and passenger fares, have trailed inflation rates.
3. There is massive headroom to improve its operating efficiency by bringing down its current operating ratio of 93.5% (as on FY14). Additionally, all operating costs have outpaced inflation.
4. It has earned the distinction of being one of the largest employers in India with 13.1 lakh employees on its payroll as on FY13. But this has created a high fixed cost structure which needs to be overhauled. As on FY13, employee costs as a % of revenues is a whopping 60%. A huge employee base results in an equally big pension liability which could become a ticking time bomb.

We hope for a Budget which provides incisive and well-defined time bound actionables which will usher in structural reforms for the Indian Railways and restore its financial health.

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