Railways need Rs Rs 50,000 crore Arun Jaitley support

With the finance of the railways in a tough spot following a dip in both passenger and freight earnings, rail minister Suresh Prabhu will require magnanimity to the tune of Rs 50,000 crore in gross budgetary support (GBS) from finance minister Arun Jaitley in the upcoming Budget.

The railways is expecting a shortfall of about Rs 7,500 crore on account of passenger and freight slippages, while it will need at least Rs 70,000 crore to tide over demands due to implementation of the Seventh Pay Commission recommendations and working on priority projects.

“The expectation is of 10 per cent slippage on the freight target, which will take away a budgeted estimate of about Rs 6,800 crores. There is additional likely shortfall on passenger earnings of about five per cent, causing a Rs 600-crore shortfall in earnings,” said a senior Railway Board member.

In the current financial year, savings due to decreased energy (diesel and electricity) appear to have given some comfort to the railways. “The estimated saving on account of decreased diesel cost is about Rs 2,200 crores and Rs 1200 crores following lower electricity costs. Also, last year’s Rail Budget had estimated a five per cent growth in establishment expenses, which actually has been about one per cent. Thus, there is small comfort as far as the current financial year is concerned,” the official said. He also said that the railways will maintain the overall operating ratio of about 87 per cent in 2015-16.

However, it will have to meet an additional outgo of about Rs 30,000 crore in the next financial year on account of the implementation of the Seventh Pay Commission recommendations. “If the recommendations are implemented in a staggered manner, there will be relief, else the finance of the railways will be under huge stress,” said the official, adding that Mr Jaitley should commit a GBS of at least Rs 50,000 crores in the upcoming Budget.

The railways will have to earmark about Rs 40,000 crore at least for projects, which it hopes to finance through the commitment of the Life Insurance Corporation of a loan of Rs 30,000 crore each year for five years. Share