This indicator refers to Indian Railways’ pension expenditure, which constitutes a major component of its recurring financial obligations. It includes payments for pensions, family pensions, and other post-retirement benefits for the retired workforce. Given the large size of the Railways’ workforce, the annual pension bill has grown significantly, especially with increasing retirements and periodic wage revisions under Pay Commissions. To address the mounting liabilities, the government introduced the National Pension System (NPS) in 2004 for new entrants, shifting from a defined benefit to a defined contribution model. This reform aims to curb future pension liabilities, but the legacy burden of employees recruited before 2004 remains high, continuing to strain financial resources.

Tracking pension expenditure is critical for evaluating the financial health and sustainability of Indian Railways. High pension outflows limit the ability to invest in infrastructure, modernisation, and service improvement, thereby affecting operational efficiency. This indicator underscores the need for structural reforms and innovative financial planning to balance employee welfare with fiscal prudence. It also highlights the importance of human resource policies, including workforce optimisation and the long-term impact of retirement benefits on public sector finances. In the broader context of public finance and governance, this indicator is essential for ensuring that Indian Railways can meet its future obligations without compromising its core mission of affordable and efficient transportation.