1. Lead-up to Budget 2017: Flush with funds, Indian Railways fails spending test

Lead-up to Budget 2017: Flush with funds, Indian Railways fails spending test

With an aim to spur spending and boost economy, the Narendra Modi government had decided to scrap a separate budget for railways and merge it with general budget ending a nearly century-long practice.

By: | New Delhi | Updated: January 19, 2017 11:09 AM
With an aim to spur spending and boost economy, the Narendra Modi government had decided to scrap a separate budget for railways and merge it with general budget ending a nearly century-long practice. (Reuters image) With an aim to spur spending and boost economy, the Narendra Modi government had decided to scrap a separate budget for railways and merge it with general budget ending a nearly century-long practice. (Reuters image)

With an aim to spur spending and boost economy, the Narendra Modi government had decided to scrap a separate budget for railways and merge it with general budget ending a nearly century-long practice. Now it is up to the railways to tap this opportunity to boost its revenue and infrastructure. But with Budget 2017 barely days away, shocking details have emerged. Despite assured funding, Indian Railways could spend only around 50 per cent of the assured funds allocated under various major plan heads by December 2016, according to The Indian Express show.

The total expenditure incurred in the 24 main plan heads that signify actual asset creation in Railways during a particular year, the expenditure, so far, is just about Rs 600 crore more than last year’s figures. Moreover, its pro-activeness in taking loan from the LIC of India to fund high-returns works is not matched by the rate at which it is actually able to utilise the borrowed money as only 24 per cent of Extra Budgetary Resources (Institutional Financing)- or about Rs 5,000 crore out of the budgeted Rs 20,985 crore has been spent so far, signifying a lack of appetite for the borrowed funds.

By December, the total capex in major plan heads has been Rs 50,823 crore, excluding the expenditure on account of partnership entities. This is almost as good as the figures achieved last year, which means despite an increased budget to spend, the transporter’s ability to spend remains more or less the same. For next financial year, Railways has got Rs 48,000 as Gross Budgetary Support. It’s pace of spending money under capital fund, so far, has been just about 58 per cent or around Rs 19,334 crore.

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In doubling of lines, funded majorly by borrowed (assured) money, and which does not involve acquiring of land since almost all doubling works happen on land owned by Railways, the utilisation of money is a dismal Rs 4,547 crore or around 20 per cent of the allocated Rs 25,000 crore, records show. The target of capex being Rs 1.17 lakh crore, around Rs 23,000 crore more than last year’s actual capital expenditure achieved, will eventually include around Rs 18,000 crore worth of works done by partnership ventures.

In matters of safety, the funds related to works on level crossings and such infrastructure saw utilisation of between 51 and 57 per cent by December. An extra Rs 10,780 crore that Railways got last year after much bargaining and haggling with the finance ministry as safety fund, has also seen sub-optimal utilisation at around Rs 5,809 crore or around 53 per cent, the report said.

Railway minister Suresh Prabhu has insisted that the Budget targets be met no matter what, according to the report. The report said delay in finalisation of high-value tenders across Indian Railways is one of the reasons behind the slothness.

Two years ago, Prabhu had announced in Budget that Railways would eventually go the way of awarding Engineering Procurement Construction (EPC) contracts. As is the global norm, these contacts are given in large value works wherein one big player does everything from producing the detailed engineering design of the project, procurement of materials and the actual construction. The nature of execution and management in EPC contracts is believed to produce results faster with less hassle in terms of overseeing of work.

Two years ago, the Prime Minister’s Office (PMO) wrote a letter to Prabhu expressing concern on the delay in spending money and getting works done. In fact, the finance ministry had also slashed its Gross Budgetary Support citing same reason.

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    prashant
    Jan 19, 2017 at 11:32 am
    Dont understand all this mess.... U have funds and cant spend it??And cry that you dont have money to increase safety,punctuality of railways...Can t understand ...
    Reply

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