The Railways? plan for a financial turnaround may just prove to be very costly. The Planning Commission has sharply pruned the railway ministry?s Plan size for the 11th Plan period by over 25%.
It has now been allocated about Rs 1,91,000 crore Plan size at 2006-07 prices from its original demand of Rs 2,40,000 crore by the government.
The budgetary support component too has been reduced to about Rs 43,000 crore for the five-year period from 2007-12. The ministry had asked for Rs 65,000 crore as budgetary support during the 11th Plan.
Impressed by its financial success, the Plan panel has asked the railways to use its huge tranche of internally generated funds and to increase its market borrowings to meet the bulk of the Plan expenditure.
The railway ministry, however, is not too pleased with this development and feels that raising about Rs 1,50,000 crore by itself is going to be a very difficult task.
?Traditionally, budgetary support has been kept at about 35% of the Plan size. But this time along with the entire Plan size, the budgetary support component too has been cut down to about 22%,? aRail Bhawan official pointed out.
So while the 11th Plan document was approved by the Cabinet last week, rail minister Lalu Prasad is still trying to get some more funds for the five-year period. However, sources have pointed out that Plan sizes of many ministries has been reduced and railways are not the only one singled out for this.
Railways Plan allocation target for the 11th Plan is the largest ever and was about three and a half times more than the Rs 60,600 crore it received as allocation for the 10th Plan period. The ministry proposes to use these funds mainly for technological and infrastructure upgrade works, key among them being the dedicated freight corridor. High on its agenda is also to improve and upgrade its technology; especially those used in tracks, locomotives, coaches, wagons, signaling and its information technology services.