7th Pay Commission: Good news for Indian Railways employees has this big impact elsewhere

7th Pay Commission: Indian Railways employees had received the good news with joy. And while concerns were raised as far back as last year, it is only now, that the full impact of giving these employees a fat pay hike has been revealed. The monetary burden that the Indian Railways is likely to bear is mammoth. Of the tens of thousands of central government employees, and we are talking about only Indian Railways, the pay hike has translated into an extra burden of Rs 20,000 crore in salary bill and pension liability. This 7th Pay Commission implementation order has hit Indian Railways hard. The full implementation of the 7th CPC recommendations has affected the finances of the government and this may well be the reason it is shying away from making any further commitment over the present demands other central government employees.
 
Talking about the fallout of the implementation of the 7th Pay Commission in the Indian Railways, Union Minister Piyush Goyal was quoted as saying, “Whenever there is a pay commission, the expenditure naturally goes up. This time it was the seventh pay commission.” Goyal had made this statement at News18's Rising India event. This burden has hit the Indian Railways hard and reportedly, it is set to declare its worst ever operating ratio soon. The Union Budget 2018 had announced a revised operating ratio for the national transporter, which for financial year 2017-18 stated the same to be at 96 percent. The operating ratio, the measure of performance, is now the highest since 2000-01, when it was 98.3 percent. Operating ratio is an indicator of the financial health of Railways, showing how much the national transporter spends to earn a rupee. An operating ratio of 98.5% means that it spent 98.5 paise to earn 100 paise (Re 1) in the last financial year, showing a negligible surplus. 
 
However, it is not just the 7th Pay Commission that is responsible for the Indian Railways plight. Other reasons are there, but this one is grabbing eye-balls the most. In February 2018, Minister for Railways Piyush Goyal had reportedly blamed the Trinamool Congress and Congress Party for the plight of Indian Railways, adding “If anybody is responsible for pushing the Railways to this stage then it is the Trinamool and Congress.” In the given scenario, for over 48 lakh central government employees plus a massive army of pensioners, including Railways officials, the fulfilment of their demand with a fitment factor of 3.68 times and minimum pay scale of Rs 26,000 appears very difficult.
 
With the Indian Railways problem putting the scanner back on 7th Pay Commission, any forward movement will be a big surprise. Till the government makes any concrete announcement, the employees have to believe the assurances made by ministers including Home Minister Rajnath Singh and Finance Minister Arun Jaitley that they will look into the matter related to increasing pay.

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As far as Indian Railways is concerned, it would be looking to raise its revenues from assets as well as ramping up its services. This is a tough ask, but the only way this mega-PSU can make a successful comeback.