Rail Budget 2015: Railway finances will be hard-pressed in near future, says White Paper

By: | Updated: February 26, 2015 10:19 PM

Indian Railways' finances will be hard-pressed in the near future with the anticipated increase in committed expenditures, according to a White Paper...

Rail Budget 2015, Rail Budget, Suresh Prabhu, Suresh Prabhu rail budget, rail budget white paperThe 66-page White Paper has given details of railways’ finances, expenditures on projects and suggestions for improvement. PTI

Indian Railways’ finances will be hard-pressed in the near future with the anticipated increase in committed expenditures, according to a White Paper on the national transporter tabled by Railway Minister Suresh Prabhu in Parliament today. (Read Full Report: Suresh Prabhu’s White Paper)

The 66-page White Paper has given details of railways’ finances, expenditures on projects and suggestions for improvement.

It has also observed that the likely impact of the next Pay Commission cannot be estimated but it will put further pressures on the national transporter.

The report has revealed a declining share of internal resources from 28 per cent in 2010-11 to 19.1 per cent in 2013-14, which means increased dependence on gross budgetary support.

The document also observed that internal resource generation was not sufficient to meet the expenditure and suggested other mode of fundings.

“Generation of internal resources is insufficient to take care of the plan expenditure. Hence other and alternate means of resources are required to be tapped for funding of bankable projects that can be executed in a short time span,” the report said.

It has also observed that previous experiments with financing projects from Indian Railway Finance Corporation (IRFC) borrowed resources was not entirely successful and an alternative model required to be worked out for mustering resources for project financing.

It has noted that though efforts were made in the past to involve private sector in creation of rail infrastructure but this has been met with limited success.

Absence of regulatory mechanism, no control over network and tariff uncertainty of traffic materialisation and delay in process have not generated confidence among the investors.

It has suggested to adopt the EPC (engineering, procurement and construction) mode of construction of rail projects.

Railways bears social service obligation of around Rs 25,000 crore every year by carrying passenger and goods services below the cost.

The White Paper brought out by Prabhu has highlighted railways’ social obligation. It has found that in 2013-14, the net social service obligation of railways was Rs 21,391 crore.

A review of financial results of existing 88 “uneconomic branch lines” for the year 2011-12 shows that on an original investment of Rs 1,719 crore, the loss during 2011-12 amounted to Rs 1,366 crore.

Despite concerted efforts to enhance earnings on branch lines, most of these lines are still not commercially viable, it noted.

The Railways Reforms Committee recommended closure of 40 such lines but due to stiff public resistance and opposition by state governments towards withdrawal of such services, only 15 lines have been closed permanently by railways.

The White Paper also reflects that 94.64 per cent share of revenue is concentrated in the unreserved segment including suburban and the revenue loss in the segment is around 68 per cent.

Last time, White Paper was brought out in 2009 by then Railway Minister Mamata Banerjee. She has also brought out a ‘Vision-2020’ document for future road map.

Prabhu will now bring out a ‘Vision-2030’ document, which will contain a blueprint for long-term development of Indian Railways.

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