Railways, which is hard-pressed for resources, has got a financial relief of over R1,100 crore from the Railway Convention Committee in the form of lower dividend payout for 2011-12. The panel has fixed the rate of dividend to be paid to the Centre for the current fiscal at 5% against 6% in the last two years.
This will bring the outflow of money on account of dividend payout down by R1,122.45 crore from the budget projection of R6,734.72 crore, releasing significant funds for investment in capacity expansion of rail infrastructure. Railways has planned aggressive investments in new lines, safety, high-speed rail and rolling stock in five years starting April 2012. The plan will be implemented at an outlay of R7.2 lakh crore, railway data show.
It had demanded a steeper cut in the rate but its efforts were scuttled by the finance ministry. Railways had urged the committee to fix the rate at 3% but the finance ministry said it would result in negative payout considering various subsidies and reimbursements received by the state-run entity.
According to the finance ministry, Railways had received R2,810 crore in subsidy and reimbursements on strategic lines, gauge conversion, north-eastern railways and ore lines
in 2009-10.
A finance ministry representative told the committee that ?Railways is being compensated through subsidy and reimbursement of losses on operation of ?strategic? lines and there is no ground for the ministry of railways seeking reduction in applicable rate for payment of dividend?. ?In fact, Railways should endeavour to pay higher dividend to general revenues,? the representative said.
However, the panel took a considerate view of investments of R1.3 lakh crore by Railways in pending projects and set the rate at 5%. It also asked the Centre to provide a higher gross budgetary support (GBS) to the transporter. For 2011-12, railways would receive GBS of R20,000 crore against its demand of R39,000 crore.
The Railways was caught unawares in August 2008 when the Centre enhanced salaries and perks of its employees effective January 2006. Ever since, it has paid R55,000 crore as additional salary and is required to pay R18,000 crore extra every year as recurring expenditure under the head ?salary?.
Absence of real efforts to increase revenue and reduce costs made the matter worse. It had demanded a waiver in dividend payout last year but could not convince the committee of the same.
