Q. Consider the following statements about Operating Ratio in Indian Railways:

1. The higher the operating ratio of Indian Railways the better is the condition of Indian Railways
2. Operating ratio’ of Indian Railways is high on account of social service obligation imposed in Budget

Which of the above statements is/are correct?
Answer: 2 Only
Notes: The financial health of the railways is determined by its Operating Ratio (OR). Operating Ratio indicates how much railway spends to earn a rupee. An Operating Ratio of 90% means that Railway is spending 90 paisa to earn 100 paisa. With Seventh Pay Commission into effect, the OR is expected to go above 100%.