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To cut costs, Indian Railways to axe thousands of retired staff it had re-hired

Railways’ finances have taken a further hit in light of the Covid lockdown, which brought passenger trains to a complete halt until the Shramik operations were launched in May. 

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New Delhi: Thousands of retired Indian Railways’ employees who were re-engaged last year are set to lose their jobs as the transporter looks to cut its expenses to ease the lockdown hit, ThePrint has learnt.

While the move is driven by other factors too, like the increased vulnerability of retirees to Covid-19 on account of their age, highly placed sources in the railways said cutting these jobs will save the transporter crores in salary bills.  

The jobs in question involve the junior-most staffers, involved in operations such as track machines, bridge and similar technical safety categories. The pension they are entitled to is 50 per cent of the salary they get.

The Indian Railways’ ailing finances have taken a further hit in light of the Covid-19 lockdown, which brought Indian passenger trains to a complete halt — an unprecedented occurrence — until the Shramik Express operations were launched in May. With the pandemic threat still strong, full-fledged operations are yet to resume.

According to the sources, the zonal railways are seeking to terminate the services of the re-engaged staff with immediate effect in a bid to save money at a time when the revenue generated is at an all-time low due to the pandemic. 

Some zones, like the Southern Railways and the Southern Eastern Railways, already terminated the services of the staff in May. 

In a letter dated 5 May, the Southern Railways said, “In view of partial attendance due to lockdown, and also greater risk involved in the case of those above 60 years due to Covid-19, it is decided that the services of all the re-engaged retired staff of all workshops of Southern Railways as per the details of given below are to be terminated duly given 15-days-notice.”

When contacted for an official comment on the matter, Union Railway Ministry spokesperson D.J. Narain said he was not aware of any such developments.

Also Read: A train of afterthoughts: How Indian Railways itself became the story in a lockdown

Why so many re-engaged employees?

In 2019, the Railway Board had approved a scheme that aimed at tapping its retiree pool to fill up thousands of vacancies, contractually and on an “experimental basis” for a period of two years. The scheme was to allow re-engagement “against clear vacancies against direct recruitment quota” in the Pay Grade level 1 to 7, which means at the junior-most levels. 

“As soon as the vacancies are filled up by fresh recruitment or any other mode, including compassionate ground appointments, the contractual engagement made through this channel should be reduced accordingly,” the order had said. 

Thousands of retirees were subsequently hired “in track machines, bridge and other similar technical safety categories”.

“There are thousands of re-engaged employees working in the Indian Railways… They have been re-engaged due to shortage of staff,” a senior officer said. “In Northern Railways alone, there are about 1,000 re-engaged staff.” 

Talking about the decision to remove them, the officer said “there was surplus manpower during the lockdown and the railways was not able to utilise its manpower effectively”. 

“Moreover, since those who are re-engaged are in the 60+ age group, and very vulnerable to Covid-19, it is felt that terminating their services would be a prudent exercise,” the officer added.

Additionally, doing so would save the exchequer hundreds of crores per month, the officer said. 

Discussing the origins of the re-engagement policy, a second senior railway officer said recruitment by the Government of India is low, which is why the railways — an extremely manpower-dependent entity — resorts to retired staff. 

“The tasks in the railways are very specialised… So in the face of low recruitment, there is dependence on retired staff… But yes, that is an additional financial burden, of course.”

After the termination of their services, the re-engaged staff will be paid their pensions

Also Read: Railways looking to ensure ‘multi-tasking’ at junior levels as part of service merger plan

The transporter’s unending financial woes

The nationwide lockdown imposed in light of the Covid-19 pandemic has exacerbated the financial woes of the transporter, whose wage and pension bill has reportedly risen to two-thirds of all costs.

In January this year, Railway Board chairman V.K. Yadav had asked the Union Finance Ministry to create a pension fund for railway employees, saying about 25 per cent of its earnings go into paying pensions to the tune of Rs 50,000 crore. 

Yadav also noted that a large chunk of railways earnings is spent on paying salaries to its 12.5 lakh employees.

In 2019-20, the operating ratio of the railways was 98.44 per cent, which means that the railways was spending 98.44 paise to earn 100 paise (Re 1) during this time. 

With the revenue from passenger trains next to negligible in the last three months, and that from freight trains suffering too, the operating ratio is bound to go up even further. 

Also Read: Stray trains: Poor planning by Indian Railways or overwhelming load on some routes?


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  1. Meanwhile Indian Railways seems to have the money to donate to PM Cares fund, while the central govt has thousands of crores spare to
    spend on new buildings for different govt ministries including the railway ministry.

  2. True, that Rly spend more money for staff, disproportionate to the income,, With 7 nth PC the expense has gone up with out corresponding productivity. In govt service increase in payment will not yield corresponding output, as there is no correlation between the two, There for either staff or there payment to be regulated for sustaining the system.The merging of cadres, now envisaged is both a managerial and financial solution.The trade unions also has to get roped in to join hands for measures which will keep the orgs stable

  3. Government staff are a burden on the citizens. Indiscriminate hiring throughout history with salaries + pensions is a millstone around the people of India.
    Cut government recruitment.

  4. Why don’t they cut half of the UPSC appointed dead wood at the higher levels who are just Waste?.

  5. Ttipur se train kb hai jharkhand ke plz sir hm log tamilnadu me hai aur ghar jharkhand jana chahte hai

  6. Notification on cen01/2018 under prosses there are so many candidates are waiting list then recruit the fresh manpower and trained them well. Please do that. the current situation jobs are very important for un employers not for retired employees he have already pensioners. As soon as possible complete the recruitment.

  7. For a commercial enterprise to spend 25% of its revenue on pensions is unsustainable. As is an Operating Ratio of 98.44. That itself is an undercount since adequate sums are not being set aside for depreciation and renewal of tracks and other assets. Clearly railway finances are in the red zone. It’s ministers who have been chartered accountants need to focus on this, let the professionals manage the operational aspects. No way IR can afford the Bullet train from Bombay to Ahmedabad.

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