Home Bangladesh Bangladesh Rail spends Tk 2.78 to earn Tk 1.00
Bangladesh - June 25, 2023

Bangladesh Rail spends Tk 2.78 to earn Tk 1.00

Corruption main barrier

Mahfuja Mukul: Even 25-years ago, Bangladesh Railways was a profitable company. Even after meeting all the expenses of running the train, the money that the company earned by transporting passengers and goods would leave some money surplus. In the financial year 1998-99, such surplus in the organization was about Tk 18.5 crore. Since then, as time has passed, the railway has gradually turned from a profitable to a loss-making enterprise.
According to the latest published report, the company’s losses in 2020-21 have increased to Tk 2,100 crores. Along with the losses, the institutional capacity of the railways also decreased. 25 years ago, where the organization had to spend 96 paise to earn Tk 1. Currently, while earning Tk 1.00, the railway is spending Tk 2.78.
Experts blame institutional inefficiency for this condition of railways. They say that railways are not able to use their resources and manpower properly. Apart from institutional inefficiency, they believe that corruption is also responsible for the continuous losses of the railways.
The Ministry of Railways also agrees with such statements of experts. A presentation by the Ministry of Railways mentioned, “Unless corruption and irregularities in railways are stopped, fair utilization of railway resources is not ensured and passenger service quality is not improved, it will be difficult to reduce losses.”
How efficient the management of an organization or company can be easily verified through the ‘operating ratio’. The operating ratio is basically calculated by dividing the total expenses by the total revenue in a particular period. The higher the operating ratio, the weaker the management efficiency of the company.
Analyzing the published data of Bangladesh Railway, it was found that the operating ratio of the company was 95.9 percent in the fiscal year 1998-99. In other words, the railways spent 95.9 paise for every Tk 1.00 of income in that financial year. Later, the company could not maintain this rate of operating ratio.
In the financial year 2008-09 this ratio was 158.9 percent. In other words, the railways has to spend about Tk 1.59 for every Tk 1.00 income in that financial year. The operating ratio of Railways was 217 percent in the financial year 2015-16. In the financial year 2019-20, this ratio increased to 246.2 percent. And in the financial year 2020-21, the operating ratio reached 277.83 percent. That is, Bangladesh Railway is currently spending about Tk 2.78 for every Tk 1.00 of income.
Transport expert and professor of Bangladesh University of Engineering (BUET) Hadiuzzamanblames the administrative inefficiency and corruption for the continuous increase in the operating cost of Bangladesh Railway compared to the revenue income. He said, ‘Railway officials always say that they are running with half the manpower. If the manpower is less, the operating expenses due to salaries and allowances should come down. But we don’t see it. Rather, we see the increased interest and corruption of railways in shopping. We constantly hear about the negligence and corruption of the railway workers. If this goes on day by day, it is natural that the loss of the organization will be heavy.
In order to reduce losses and equalize the ratio of income and expenditure, increasing administrative efficiency as well as stopping irregularities and corruption and taking various strategic measures, he said, “Railway has about 60,000 acres of land in the whole country.” These lands should be used properly. Dependence on passenger transport should be avoided. Importance should be given to the transportation of goods and the necessary infrastructure should be arranged accordingly.
Railways are not only incurring high cost-to-income ratio, but are also not contributing significantly to the country’s transport system. It was mentioned in a meeting about the project implementation of Bangladesh Railway at Rail Bhavan recently that the organization is transporting only 4 percent of the total passengers of the country. Similarly, only 4 percent of the total goods are transported by rail.
The main revenue sector of Bangladesh Railway is passenger transport. More than 60 percent of the total income comes from this sector. On the other hand, 20 percent of the company’s total revenue comes from transportation of goods. The remaining income comes from various sectors including land lease, catering. On the other hand, the largest sector of the company’s operating expenses is engine-coach repair and maintenance.
More than 30 percent of the total expenditure is in this sector. Apart from this, about 17 percent of the total expenditure is in the fuel sector, about 12 percent in the salary and allowances sector, about 9 percent in the administrative activities sector and about 29 percent in the miscellaneous sector.
Although the railway sector has received huge investment in the last two and a half decades. Especially in 2009, the Awami League government came to power and paid more attention to the development of the railway sector. The Railway Department was transferred to the Ministry. 83 development projects were implemented from January 2009 to June 2022.
It costs Tk 20,666 crore. There are currently 34 ongoing projects with an estimated cost of Tk 1 lakh 41 thousand 505 crores. Although this huge expenditure could not make the company profitable. On the contrary, the amount of losses has increased year by year. According to the data of ‘Bangladesh Economic Review 2023’, the organization has incurred a total loss of Tk 2,102 crore in 2020-21.
Transport expert and professor of BUET Samshul Haqthinks that huge investment in the past era could not play a role in improving the quality of railways. He said, ‘In the last few years, huge investments are being made in railways. But there is a big lack of coordination between them. It is not being properly determined which work should be done first, which should be done later. Railways can generate a “barrier” revenue through freight. Similar income can come from asset management.
Development projects should have been taken up with priority on these issues. In addition, importance should have been given to improve the quality of passenger services by increasing the speed of trains, reducing schedule disruptions. But they could not rail. Now we will look at a few things. Losses will continue to mount. With this will be added the return of development expenditure. Not only should the railways be blamed for this continuous backwardness, the Planning Commission as well as the government also have a lot of responsibility.
However, Railways Minister Nurul Islam Sujan refuses to accept that the railway is getting worse day by day. He told, “Rail is in a much better position now compared to a century ago. The train schedule has improved. Modern engine-coaches have been and are being added. Renovation of old railways, construction of new railways.
A separate bridge for railways is being constructed on the river Yamuna. Important railways are being upgraded to double lines. After the completion of the ongoing projects, the rail transport service will reach a better position.

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