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Rising diesel prices threaten to derail Railway budget

Sources say soaring diesel prices could add Rs 800 crore to Rs 1,000 crore to the total amount of approximately Rs 18,000 crore already spent on the fuel each year.

Rising diesel prices threaten to derail Railway budget
File photo

New Delhi: Rising fuel prices in the country have not just hit the common man hard but its ramifications are being felt elsewhere as well. The Indian Railways is feeling a painful pinch as diesel prices soar to astronomical levels and its budget and operating ratio could take a profound hit if the price hikes follow the ongoing trajectory.

Sources have revealed to Zee News that the current spike in diesel prices have been wrecking havoc with the budget of Railways for well over a month now. It is also being speculated that if prices continue to rise, infra projects could become the next victim with Railways having to re-appropriate funds towards meeting its operational cost ratio needs. Operational cost ratio, in simple terms, refers to how much money is spent to earn Re 1.

Indian Railways spends approximately Rs 18,000 crore on diesel each year but with rising prices this year, the annual expenditure on the fuel could see a significant rise by about Rs 800 crore to Rs 1,000 crore. Therefore, there are indications on the ground that infra projects like electrification, line doubling, line tripling, and laying of new lines could take a hit.

What is possibly making financial matters worse for Indian Railways is that there are other factors that have already put pressure on the annual budget. Seventh Pay Commission has resulted in salaries and pensions disbursed going up significantly. Then there have been subsidies worth Rs 33,000 crore extended to passengers. And there are factors like giving bonuses to employees and the pressure to provide about 1 lakh new jobs on the world's largest employer.

All of these, and now soaring diesel prices, could make the coming few months - all the way till the end of the financial year - extremely challenging for Indian Railways.