Rlys eyes pension bail-out; plans PPP push in freight, high-speed corridors

The Ministry of Railways has asked the government to take over an estimated Rs 50,000 crore pension liabilities because of the current financial stress in the Indian Railways. The organisation, which is looking to enhance its capacity by 2024, is likely to end this financial year with an operating ratio which will be worse than the previous year.

The Railways is, however, aiming to complete major projects, including dedicated freight corridors, high-speed railway and signalling upgrade, in order to take its share in freight traffic to 75 per cent, from the current 25 per cent.

The Indian Railways has about 1.5 million pensioners. Unlike other government departments, the pensioners are paid from the rail revenue itself. “We have requested the Ministry of Finance to take over the liability, either in full or in phases. Else we will be left with a deficit of Rs 15,000-20,000 crore. There is definitely stress,” Y K Yadav, chairman, Railway Board, said on Wednesday. The Railways was targeting 95 per cent operating ratio for the current year after it registered 98.4 per cent in 2018-19 and 97.29 per cent in 2019-20. The revised operating ratio to be presented in the Budget Estimates later this week is expected to more than the budgeted number.

Yadav said the Railways is trying to rationalise expenses and increase earnings in the remaining two months in order to deal with the stress in finances. He said the Railways is likely to end the year with earnings of Rs 1.9-2 trillion, of which 25 per cent would go towards meeting pension liabilities.

The emphasis would be on increasing capacity by building high-speed corridors, dedicated freight corridors, and multitracking.

Three more dedicated freight corridor projects would be taken up either on private public partnership (PPP) mode or through multilateral funding. Bids would soon be invited for the Sonnagar-Dankuni dedicated freight corridor, for which 89 per cent land has been acquired. This is likely to be taken up on PPP with viability gap funding (VGF). “Companies could bid for VGF or a premium,” said Yadav, adding the Railways is also looking at the option of an annuity model for the project.

Feasibility studies were conducted for 5,071 kilometre (km), of which three corridors were identified with 3,930 km since they have an internal rate of return of more than 20 per cent. “We have sanctioned detailed project reports. The high-speed corridor projects and dedicated freight corridors will be taken up either through PPP or on debt from multilateral agencies,” said Yadav.

On the bullet train project on the Ahmedabad-Mumbai high-speed corridor, the chairman said 96 per cent of land would be available in the next six months. Bids have been invited by April 15 for six packages. There would be 28 packages for the corridor, which is likely to be operational by December 2023. The Railways is also looking at six more high-speed and semi-high-speed corridors.
 

Asked about the impact of economic slowdown on freight traffic, Yadav said only coal loading among all the freight commodities was impacted.