Railways' revenue efficiency seen at five-year best in FY27

National carrier to estimate lower operating ratio on higher freight income and central funds

- Subhash Narayan

While Railways' pension liability has kept its operating ratio at above 98% for the past few years, a fast return to normalcy post covid may reduce it for 2026-27.

Indian Railways is expected to project its operating ratio below 98% in 2026-27—first time in five years— driven by higher freight earnings and increased central funds, two persons close to the matter said.

After improving to 97.45% in 2020-21, Indian Railways' operating ratio remained elevated at 107.39% in 2021-22, 98.14% in 2022-23, 98.43% in 2023-24, 98.32% (revised estimate) for 2024-25, and 98.43% (budget estimate) for 2025-26.

The operating ratio measures an organization's operational efficiency by comparing its working expenses, such as fuel, salaries, and maintenance costs, to its traffic earnings. The ratio indicates the amount spent to earn every ₹100. A higher ratio indicates a weaker ability to generate a surplus, while a lower ratio allows Railways to channel more of its earnings towards capex.