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Pay increases signal red for Indian Railways

The Seventh Pay Commission’s recommendations will be an “unbearable burden” on Indian Railways’ finances and may have an impact of up to Rs 32,000 crore annually, Railways Minister, Suresh Prabhu, said.

“The Pay Commission reports will have a significant impact on finances and it will also impact the operating ratio. We will see what to do,” said Prabhu.

The recommendations will have an impact of Rs.30,000-Rs.32,000 crore on Railways’ finances, he said.

Operating ratio (money spent to earn Rs.100) depicts the financial health of the Indian Railways. The Railways Ministry has targeted to achieve 88.5 operating ratio in 2015-16 against 91.8 of the previous financial year. It will take effect from January 1, 2016. .

The present financial year’s budgeted a wage bill for Indian Railways at about Rs.40,435 crore. Salaries of the 13 lakh people employed by Railways constituted a quarter of its total expenditure of Rs.1,46,000 crore in 2014-15.

The draft to form an independent regulator, Railway Regulatory Authority of India, to set passenger fares and freight rates for the Railways is ready and will soon be released for public comments.

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