The proposed RSF will go towards the renewal of over-aged assets of track, bridges, signalling gear and rolling stock within a fixed time frame of 5-6 years.
To raise the required money for the proposed RSF, the railways is mulling over several options including raising money through railway bonds and levying safety cess on passenger tickets as suggested by former rail minister Dinesh Trivedi. Sources said the rail ministry may rope in the financing arm of Indian railways Indian Railway Finance Corporation (IRFC). The option is to allow IRFC to come out with a bond issue. Around R10,000 crore could easily be raised through IRFC, said a railway officer.
Other options before the railway ministry include commitment of dividend-free grant by the finance ministry (around R20-24,000 crore spread over the next 5-6 years) and a contribution from the Central Road Fund (R5,000-6,000 crore). The rail ministry will also contribute from the Railway Safety Works Fund (maintained by the finance ministry), out of the dividend payable to general revenues. The ministry is also in favour of imposing a small safety cess (between R5 to R10) on railway tickets to generate upto to R10,000 crore annually.
Sources in the rail ministry told FE that the RSF was earlier pegged at R40,000 crore which has now been scaled up to R66,000 crore at the behest of the new rail minister whose focus are is the upgrade of critical safety infrastructure in railways rather than announcing big-ticket projects.
The minister has taken note of the current finances of railways and is understood to be exploring various sources raise the money for this fund. The ministry of finance would soon be approached for a grant for this safety fund as it was done in 2002, said a senior railway officer.
Well be asking for a one time grant from the ministry of finance. When the first fund was set up in 2002-03, the grant came from the ministry of finance. While it is correct that our financial performance has not been on the expected lines in recent years, theres certainly a need to allocate higher resources for strengthening safety, said a senior railway officer.
The last time the government infused R17,000 crore for safety upgrade, Railways overachieved its committed target of reducing frequency of consequential accidents from 0.44 to 0.17 accidents per million train kilometres. TheComptroller and Auditor General of India (CAG) in its report, which came out in May, severely criticised the Indian Railways for underutilisation of the existing safety fund.
Well also write to the ministry of finance to waive off the dividend we pay on the gross budgetary support provided by the ministry. Every year, we pay dividend of around R5,000 crore, So, if that amount if waived off for a period of five year, well get around R20,000 crore in that fund, the officer said.
The CAG audit report submitted in Parliament in May studied the implementation of the policy with respect to safety works between 2006-07 and 2010-2011. During the period, the railway department not only made less budgetary allotment from the funds available with the RSF, but also surrendered a major part of it that was allotted in the Budget. The study revealed gross underutilisation of funds from Railway Safety Fund since inception in April 2002. Between 2006-07 and 2010-11, Budget allotment was less than 45% of available funds while in a majority of instances of work, 80% of the fund allotted was surrendered, the CAG report had said.