1. Budget 2017 unlikely to allot more than Rs 50,000 crore gross budgetary support to Indian Railways: Report

Budget 2017 unlikely to allot more than Rs 50,000 crore gross budgetary support to Indian Railways: Report

Budget 2017: Suresh Prabhu-led Indian Railways is unlikely to get as much gross budgetary support as it is seeking from the Finance Ministry.

By: | Updated: January 19, 2017 11:24 AM
Budget 2017, Railway Budget 2017, Budget 2017 railways, Budget 2017 latest news Budget 2017: Indian Railways demand for higher gross budgetary support from Finance Ministry is likely to be turned down.

Budget 2017: Suresh Prabhu-led Indian Railways is unlikely to get as much gross budgetary support as it is seeking from the Finance Ministry, reports CNBC-TV 18. According to the channel’s report, the Railways demand for higher gross budgetary support from Finance Ministry is likely to be turned down. Sources in the government have told the channel that Indian Railways is demanding around Rs 60,000 crore, but the Finance Ministry is likely to give only Rs 48,000 crore to Rs 50,000 crore.

The Railways is looking at close to Rs 1.35 lakh crore of financial outlay for FY18 and plans to tap extra budgetary resources to stick to the FY18 outlay. The Railway Ministry may raise money via IRFC (Indian Railways Finance Corporation) bonds, LIC loans and PPPs.

This is the first time in 92 years that the Railway Budget will be a part of the main Union Budget, and will not be presented separately by the Railway Minister. In a radical reform, earlier this year, Finance Minister Arun Jaitley accepted Railway Minister Suresh Prabhu’s proposal to merge the two budgets. The move to discard the age-old practice of a separate Rail Budget is part of the Modi government’s reform agenda. The most important thing is that after the merger, the Railways would not have to pay dividend to the central government and its capital at charge would stand to be wiped off. The Railways used to pay up to Rs 10,000 crore as dividend to the government.

Also read: Budget 2017: FM Arun Jaitley hints at no populist measures for railways

Railway Budget is a popular part of the whole Budget exercise, especially for the common man who wants to know if any new trains will be introduced and whether passenger friendly amenties have been announced. However, it is likely that this time the Finance Minister may just table the Railway Budget components.

As the Indian Railways is saddled with under-recovery of over Rs 32,000 crore from the passenger segment, an across-the-board hike in fares could be expected soon. Though the transporter manages to fend for itself, its mammoth, legitimate capex needs are a nagging burden on the exchequer and so commuters will have to pay up, finance minister Arun Jaitley indicated recently. Slated to present the first combined general and railway budget on February 1, the minister also made a case for the railways outsourcing non-core functions like hospitality services.

Jaitley said, “Railways got caught in a battle where populism prevailed over performance.. For any commercial establishment to be run, the first essential principle is that consumers must pay for the services that they receive.”

Revenue from the passenger segment is estimated to be R52,000 crore for the current fiscal, up 12% from last fiscal. Revenue from the passenger segment is just over a quarter of the railways’ gross traffic receipts, as the bulk of its revenue comes from freight, with coal, foodgrains, iron ore and cement being the virtual milch cows for it.

Indian Railways is a mammoth organisation that needs a huge flow of funds to keep functioning efficiently. In view of the recent train accidents, focus is also on how much money is dedicated to upgrade existing railway infrastructure.

Experts are of the view that multiple things require attention when it comes to making rail travel safer. Abhaya Agarwal, Partner and PPP leader, Ernst Young India, believes that Indian Railways should spend at least Rs 50,000 crore every year to upgrade infrastructure. “There is immediate need to remove the dust on the Sam Pitroda report (on railway modernisation) and create a time bound plan for investment in infrastructure and safety. That should be the main focus area,” he tells FE Online.

(With inputs from FE Bureau)

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