Railways might miss capex target by over 20%

But rail officials expect to achieve at least last year's actual, which is close to Rs 1 lakh crore

The Indian Railways (IR) is likely to miss its capital expenditure (capex) target for a second consecutive year — this time by about 20 per cent. Sources said the railways could miss the 2016-17 target of Rs 1.17 lakh crore by at least Rs 25,000 crore. 

According to the sources, IR has spent Rs 68,059 crore till December 31, the first nine months of the financial year. “Normally, activities pick up during the last two months of the financial year due to late start of work on account of the budgeting cycle and slowing during the monsoon cycle. We expect the capex to be in the range of Rs 85,000-95,000 crore by March 31,” said a senior railway ministry official. 

That’s because with sluggish economic growth, the railways is unlikely to spend more than Rs 25,000 crore in the remaining two months. A ministry spokesperson said: “It was always an ambitious target but we have to appreciate that before (current minister Suresh) Prabhu, the capex target was always kept low. This shows the improvement in performance. With more than two months to spare, we expect to achieve at least last year’s actual or close to Rs 1 lakh crore.”

The capex was Rs 53,108 crore in 2013-14  and Rs 64,769 crore in 2014-15. In 2015-16, the Budget estimate was kept at Rs 1,00,011 crore; it achieved Rs 93,795 crore, the highest in IR’s history.

“The pace of expenditure corresponds with the physical parameters of progress during the nine months. Addition to the broad gauge network by way of doubling, new lines and gauge conversion is 1,705 km, compared to 1,273 km during the first nine months of last year. Electrification has seen a jump to 1,210 km, compared to 982 km last year,” the official added. Of the Rs 93,795 crore in capex last year, Rs 37,745 crore came from the government as gross budgetary support. For this financial year, the budgetary support was pegged at Rs 40,000 crore, including for the safety fund. The government is likely to provide the largest capital allotment in the history of IR in 2017-18.

 

 

Part of the reason for the less-than-the-targeted capex is that IR is also likely to miss its revenue target. During the Rail Budget last year, Prabhu had estimated gross traffic receipts at Rs 1,84,820 crore, of which Rs 51,012 crore was to come from passenger earnings and Rs 1,17,933 crore from goods. Passenger revenue at end-December was Rs 31,493 crore. Officials said lower demand for coal and the demonetisation’s effect on the cement sector had led to a shortfall in freight revenue of Rs 7,000 crore over the first nine months. 

Much to the relief of Prabhu, till December, the railways had seen a one per cent increase in passenger traffic. In the same period, there had been a drop of about three per cent in 2015-16, 2.5 per cent in 2014-15 and three per cent in 2013-14.