With an eye on major infrastructural upgrade, the railway ministry is likely to have an ambitious Plan size of about Rs 35,000 crore for 2008-09. This would be even larger than the annual Plan size for the current fiscal of Rs 31,000 crore. An announcement to this effect is expected to be made in the upcoming Railway Budget.
The massive increase in the annual Plan size for 2008-09 is mainly on account of the higher allocation to the ministry for the 11th Plan. The ministry has been allocated over Rs 2.15 lakh crore for the five-year period beginning 2007. Most of the funds will be aimed at infrastructure development, including the construction of the dedicated freight corridor.
However the good news may just stop here. The railway ministry is likely to witness a major cut in the gross budgetary support (GBS), which will be much less as the Plan panel feels that other government ministries will require it to a greater degree. The Planning Commission is of the view that the railways should depend on its internal generation and extra budgetary support, mainly market borrowings through the Indian Railway Finance Corporation (IRFC) to fund much of its plan.
This would, however, be in tandem with the trend in this fiscal as well. While the railway ministry had a 32% increase in its Plan outlay of Rs 31,000 crore for 2007-08, much of it was financed through internal generation and extra budgetary resources. Total budgetary support amounted only to Rs 7,611 crore. The railway ministry is, however, confident that it will be able to tide over despite any further reduction in GBS. It expects internal generation to be a record Rs 23,000 crore this fiscal. It also plans to raise more funds through IRFC in 2008-09 as it plans to begin work on the dedicated freight corridor from next fiscal.