Railways seeks finance ministry's help in addressing pension liabilities

FinMin had earlier rejected the request; Railways had met pension needs for FY23 from its own funds

The double-whammy of the Covid-19 pandemic and rising costs have been adversely affecting the net revenue of the Indian Railways, and the rail ministry has once again sought assistance from the finance ministry to ease the pressure in meeting its pension liabilities.

In the report on the actions taken by the ministry on the recommendations of the Parliamentary Standing Committee on Railways, tabled in Parliament last week, the national transporter said that while it was able to meet 2022-23 pension requirements on its own, it has asked the Ministry of Finance (MoF) for partial assistance on the insistence of the panel.

The finance ministry had previously rejected the national transporter’s request. “The committee would like to suggest that the Ministry (of Railways) vigorously pursue the matter with the Ministry of Finance,” the panel told the Railways.

In its reply, the Railways said: “Despite recommendations of the Hon’ble committee in the past, the MoF has not agreed to the proposal of this Ministry for bearing at least a part of the Railways’ pensionary liabilities. However, in light of the Hon’ble committee’s present recommendation, the MoF has again been requested to consider…”

The Railways expects pension costs in 2023-24 to be Rs 62,000 crore and has set aside Rs 70,000 crore in its budget, according to the standing committee.

High pension costs have become a notable liability for the Railways as the number of pensioners grows with each passing year. Though the Railways is expected to give pensions from its revenues, which it earns from freight and passenger operations, the past few years have been tough on that front.

Working expenditure bills have been rising in the past five financial years and revenues haven’t been commensurate, first due to the implementation of provisions related to staff expenditure in the Seventh Central Pay Commission and then the Covid-19 pandemic from 2019-20 to 2021-22. In 2020-21, a special loan of Rs 79,398 crore was appropriated in the Pension Fund.

“Despite robust revenues in 2022-23, net internal generation was less on account of a steep rise in OWE (ordinary working expenses) on account of higher HSD (high-speed diesel) prices, lease charges, etc,” the committee observed.

No fare or freight rate revision has taken place in the Railways over the past few years, with a view to keeping logistics cost low and helping marginal sections of society. This has also led to a reduction in net revenues, the committee added.