With the railways lagging behind in its plan capital expenditure in the first six months of the current fiscal, the Prime Minister’s Office has asked the national transporter to accelerate project implementation, which could be key to economic growth revival in the country.
To take stock of the performance of the railways, Nripendra Misra, principal secretary to the PM, on Monday held a review meeting with Railway Board chairman A K Mittal, finance secretary Ratan P Watal and Niti Aayog CEO Sindhushree Khullar. Sources said the PMO pushed for speeding up of projects including a high-speed rail corridor, dedicated freight corridor, priority projects, electrification, doubling of tracks, gauge conversion and station redevelopment programme. Special emphasis was given to increase in project implementation under the public-private-partnership, built-operate-transfer and and annuity routes.
On many occasions, finance minister Arun Jaitley had emphasised on public capital expenditure, especially by the railways, to boost economic activity. If the railways spends R1 lakh crore in FY16 (52% more than last year) on creation of assets, it would have a multiplier effect on the economy as various other sectors such as steel, cement, employment and so on, would get a boost.
The railways alone accounts for 30% of the Centre’s Budget capital spending of Rs 1.35 lakh crore in FY16. Including Rs 40,000-crore budgetary assistance, the railways’ ambitious plan spending will be used to de-congest existing super saturated corridors, doubling works, laying of new lines and electrification projects. While the Centre’s plan capital expenditure was scaled up to Rs 82,818 crore or 61.2% of the full year target, railways has come up as a laggard spending only Rs 15,552 crore or 39% of the transporter’s capital spending from budgetary sources. It was even lower than Rs 17,359 crore spent from budgetary source in the year ago period.
The railways’ spending through various investment funds — which are basically of the asset replenishment kind — was significantly lower in H1FY16 than a year ago. Plan spending from extra-Budget resources (EBR) — tapping the market, LIC, multilateral agencies and global pension funds — showed a modest improvement from last year, but was far from what the annual targets would have demanded. EBR Plan spending was just Rs 6,586 crore, or 16% of the full-year estimate of Rs 40,572 crore, in April-September. This compared with Rs 5,483 crore in H1FY15. In all, the railways, targeting an operating ratio of 88.5% this year against last year’s 91.8%, reported Plan spending of Rs 32,851 crore in the first half of this year, marginally lower than a year ago Rs 32,952 crore. In addition to this is the PPP segment read private investment) and the railways claims that works are being expedited on PPP projects and investments to the tune of Rs 19,000 crore are expected in the next three years. (Outside the Plan Budget are Rs 17,000-crore worth of projects awarded for the Dedicated Freight Corridor, or DFC, recently; DFC projects of an equal size are set to be awarded in the second half of the year.)
Even though analysts are skeptical about the railways meeting the Plan spending target this year, sources in the rail ministry said a jump in award of new projects in recent months would get reflected in capital spending in the coming months.
* With the railways lagging behind in its plan capital expenditure in the first six months of the current fiscal, the Prime Minister’s Office has asked the national transporter to accelerate project implementation, which could be key to economic growth revival in the country
* The PMO pushed for speeding up of projects including a high-speed rail corridor, dedicated freight corridor, priority projects, electrification, doubling of tracks, gauge conversion and station redevelopment programme