Cash crunch forces rlys to chop plan outlay again

Written by Rajat Arora | New Delhi | Updated: Dec 31 2012, 06:53am hrs
The Indian Railways is to set to trim its plan outlay for 2012-13 for the second time in a month, in what reflects stressed financials of the national transporter. The sharp (16%) downward revision of expenditure could put its much-touted expansion and modernisation projects in jeopardy, besides undermining safety measures.

Early this month, the railways had slashed its plan outlay of R60,100 crore for 2012-13 by R4,000 crore. Sources said after a fresh assessment of internal revenue flows and the likely support from the government, the railway board decided to reduce its plan outlay by another R5,000 crore to R50,500 crore.

A sharp dip in freight targets after the recent rollback of rate hikes is one reason for the scaling down of the capitalinvestments and revenue spend.

For the record, the railways is attributing the reduction in its annual plan target to decrease in freight traffic and high operating cost. The economy is being sluggish. The factory output has also not grown according to the expectations. Ban on mining in a few states also dented our targets. The upcoming Kumbh Mela, which will last for around a month, will also block our Allahabad route due to massive movement of passenger trains. Looking at all these factors, we again have to slash our plan outlay. The second cut in annual plan is expected to be between R4,000-5000 crore, chairman railway board Vinay Mittal told FE.

In the current fiscal, the railways was able to earn R67,880 crore till end of October as against the target of R70,148 crore.

Earnings from goods also witnessed a decline as the national transporter could earn R46,805.48 crore as against the target of R48,580.09 crore till October.

The freight target set by the railways for the present fiscal is 1,025 million tonnes, which is highly unlikely to be met.

The first cut in annual plan was done due to rollback in fare hike. The hike announced in last budget would have earned us around R4,000 crore extra, The plan outlay for the present fiscal was in sync with the extra revenue we would have earned through the fare hike and carrying more freight, he added.

In 2011-12 also, the railways failed to meet its freight traffic target. The target for 2011-12 was initially fixed at 993 mt, which was subsequently pruned to 970 mt and by March 31, the railways was able to achieve 969.78 mt.

In last fiscal, railways had set a plan outlay of R49,466 crore but later it was also slashed to around R45,000 crore.

According to railways, their operating ratio this fiscal is around 95%.

This means they spend R95 to earn R100, leaving them with little surplus to invest. However, the railways had expected the operating ratio to be around 85%.

There have been talks that the railways would announce a hike in passenger fares in the upcoming rail budget, but there are apprehensions whether the UPA government, hit with inflation and scams, would have the courage to take this unpopular step.

Annual Plan for 2012-13

Gross budgetary support Rs. 24,000 cr

Railway safety fund Rs. 2,000 cr

Internal resources Rs. 18,050 cr

Extra budgetary support Rs. 16,050 cr

Total plan outlay (announced in the last Budget)

Rs. 60,100 cr

Revised plan outlay (after it was slashed by more than

Rs. 4,000 cr in early December) Rs. 55,881 cr

Plan outlay expected to be after second reduction (which will be done in January) Rs. 50,500 cr (approx)