Rs 37,500-cr plan paints a rosy picture

Written by fe Bureau | New Delhi, Feb 26 | Updated: Feb 27 2008, 04:43am hrs
With a Plan size of a whopping Rs 37,500 crore for 2008-09, the Indian Railways is getting ready to play the volume game harder and longer and also to dream bigger. However, it is in for a slight reality check as despite projections, its growth may just slow down in the coming financial year.

The railways cash surplus is expected to go down marginally. According to the Budget document, while the cash surplus before dividend for 2007-08 has been pegged at Rs 25,065.49 crore, in 2008-09, it is expected to decrease to Rs 24,782.98 crore in the coming fiscal.

Similarly, its operating ratio, which is pegged at an all time low of 76.3% in this fiscal is estimated to increase to 81.4% in 2008-09, largely due to the impact of the Sixth Pay Commission. Working expenses too are set to rise to a record Rs 60,214.27 crore, a huge increase over the RE of Rs 50,437.56 crore in this fiscal. The increase in working expenses in next fiscal has also been attributed to higher cost of equipment and achinery, fuel and lease and hire charges along with more provisions under the "charged" heads.

The revised estimates (RE) for total working expenses for 2007-08 has however reduced from the BE of Rs 51,864.02 crore. This was because the railways saved Rs 1,250 crore as the recommendations of the sixth pay commission will not be implemented in this fiscal.

The ministry's focus on playing the volumes game is evident from its target for passenger and freight earnings in the coming fiscal. Gross traffic receipts has been estimated at Rs 81,901 crore for the coming fiscal, a rise of 12.6% from the estimate of Rs 72,755 crore for this fiscal.

Of this passenger traffic is expected to earn Rs 21,681 crore, a marginal rise from the revised estimate of Rs 20,075 crore for this fiscal. The bread earner for railways in the coming fiscal will continue to be its freight traffic. Earnings from freight transport have been pegged at 52,700 crore for 2008-09, a 10.3% rise over the RE of Rs 47,743 crore for this fiscal.

Meanwhile, sundry earnings is also set to almost double to Rs 5,000 crore in the coming fiscal based on anticipations of higher revenue due to commercial exploitation of land and revenue from budget hotels. Other coaching earnings will rise marginally to Rs 2,420 crore in 2008-09.

Capacity augmentation and infrastructure upgrade are also the focus areas for the Rail Budget 2008-09 as is evident from the plan size, a 21% rise from this fiscal. With fund balances to the tune of Rs 20,000 crore form 2006-07, railways however will be financing 79% of the plan through internal and external budgetary sources, including the public private partnership route. Gross budgetary support to railways for 2008-09 has been kept at a minimum of Rs 7,874 crore. Borrowing through the Indian Railways Finance Corporation, has been excluded from the plan size, but is proposed at Rs 6,907 crore. Rail Vikas Nigam will raise Rs 293 crore for its projects.

The railways will pay dividends to the tune of Rs 4,635 crore in the coming fiscal, lower than the Rs 4,882 crore it will pay this fiscal. However for the railways, 2007-08 has brought in some goods news. Its revised estimates for freight and passenger earnings are both higher than expected. Besides paying the current dividend of Rs 4,218 crore, deferred dividend liability of Rs 664 crore will also get cleared in the fiscal.