At a time when the government is pushing cash-rich public sector companies to pep up the economy through greater spending, the railways are likely to cut Plan expenditure by Rs 9,079 crore this year.
Senior officials said the cut was due to some anticipated projects not taking off and internal revenue generation not meeting the target. This would be the largest cut in railway Plan expenditure.
Even during the economic slowdown in 2008-09, the railways had cut Plan size by only about Rs 1,000 crore. A look at the budgetary data for the recent years shows cuts in Plan sizes were up to Rs 2,000 crore.
Officials said the revised estimate of the Plan size was 16 per cent lower, at Rs 48,551 crore. However, the final figure would be presented in the Railway Budget. The pruning of the Plan size would also see borrowings through the Indian Railway Finance Corporation declining by about Rs 4,800 crore.
At the beginning of this financial year, the railways had planned to fund the Rs 57,630-crore annual Plan through Rs 14,219 of internal resources, Rs 1,776 through public private partnership projects, Rs 20,000 from the government’s gross budgetary support, Rs 1,041 crore from diesel cess and Rs 20,594 crore from borrowings.
The cut in Plan size comes even as the ordinary working expenses of the railways are expected to rise by Rs 5,138 crore, primarily due to an increase in salaries, fuel costs and other non-planned expenditure. Defending the cut in Plan size, an official said, “We are trying to prioritise projects and spend money accordingly.”
More From This Section
Till November, the railways managed to spend about Rs 27,964 crore of Plan outlay, 48.5 per cent of the Budget grant and 58 per cent of the reassessed Budget grant. According to officials, the cut in planned expenditure includes a reduction in the internal resource component and borrowings.
The heads of zonal railways have been advised to re-appropriate funds from one project to another within the same Plan head and allocation to ensure better utilisation.
The railways’ internal resource generation is already compressed by Rs 1,298 crore and officials said the move had led to a reduction in the depreciation reserve fund by Rs 954 crore and in development fund by Rs 355 crore.
Plan expenditure is regarded as revenue-generating expenditure and is utilised for creating assets, compared to non-Plan expenditure that is spent on day-to-day functioning of the organisation and salaries and pensions.
The railways’ gross traffic receipts in 2010-11 were Rs 305 crore less than the revised estimate of Rs 94,840 crore presented by then railway minister Mamata Banerjee in February. The ordinary working expenses exceeded the revised estimates by Rs 1,139 crore, leaving the railways with a surplus Rs 1,405 crore, instead of Rs 4,105 crore, in the revised estimates.