Indian Railways' internal resources generation is expected to fall short of target by around Rs 10,000 crore in 2011-12. The estimated decline is due to the drop in earnings from passengers, as well as the freight segment, compared to budgeted estimates. Also, expenses have shot up, leading to a squeeze in internal resource generation margins.
According to an internal assessment by the Railways, their passenger, freight and other coaching and sundry earnings are expected to be hit by around Rs 3,700 crore. Passenger earnings are expected to dip by Rs 2,000 crore and freight earnings by around Rs 1,300 crore, compared to budgetary estimates. “In the year 2009-10, passenger earnings showed a dip of around three per cent in comparison to budgeted earnings. This generally happens because of unseasonal rains, leading to cancellation of trains,” said a railways official.
“The shortage in loading primarily high-rated commodities like iron ore, cement and coal, and decreasing lead, that is, the distance between the source and the destination, has made the realisation of freight earnings fall, compared to budgeted estimates,” said a railways official. The Railways has already missed its budgeted targets of freight loading by around 20 million tonne.
Ordinary working expenses would see a spike of around Rs 2,000 crore, primarily owing to a rise in diesel expenses of around Rs 560 crore and a 25 per cent rise in some allowances. The appropriation to pension funds is also expected to touch Rs 17,000 crore, a rise of around Rs 1,200 crore. Actual pension debits in 2010-11 stood at Rs 16,018 crore, exceeding the budgeted estimate of Rs 15,800 crore allocated to pension funds in 2011-12. The situation may also see a requirement of Rs 3,000 crore to be withdrawn from development and capital funds.
“Political compulsions have forced the railways to run as an organisation with social obligations. Leave apart running as a commercial organisation, it should at least run as a no-profit, no-loss organisation,” said an official. “The central government should give equivalent finances to the railways and declare key infrastructure projects as national projects, if the railways is expected to run as an organisation with social obligations,” he added.
Former railways minister, Mamata Banerjee, in the 2011 Budget speech, had said, “The annual plan for the year 2011-12 has been proposed at Rs 57,630 crore, which is the highest-ever plan investment by the railways in a single year. The plan is proposed to be financed through Rs 20,000 crore of gross budgetary support (GBS) provided by the central government, diesel cess of Rs 1,041 crore, internal resources of Rs 14,219 crore and market borrowings of Rs 20,594 crore through Indian Railway Finance Corporation (IRFC).” With a shortfall in earnings, there is likely to be an impact on the plan expenditure.
In 2010-11, the annual plan outlay stood at Rs 41,426 crore, to be financed through GBS of Rs 15,875 crore, diesel cess of Rs 877 crore, internal resources of Rs 14,523 crore and extra budgetary receipts of Rs 10,151 crore, including market borrowing of Rs 9,120 crore through IRFC.
| CRUNCH TIME | ||||
| Services | Budgeted estimates (2011-12) in Rs crore | Assessment based on performance till Oct(2011-12) in Rs crore | % Variation | |
| From BE (2011-12) | From RE (2010-11) | |||
| Passenger | 30,456 | 28,320 | -7.01 | 8.39 |
| Freight | 68,620 | 67,301 | -1.92 | 7.7 |
| Total earnings | 106,039 | 102,268 | -3.55 | 7.83 |
| Ordinary working expenses | 73,650 | 75,650 | 2.71 | 12.91 |
| Appropriation to pension fund | 15,800 | 17,000 | 7.59 | 8.97 |
The railways draws its receipts from gross budgetary support, internal resources and extra budgetary receipts. GBS is the loan taken from the central government, for which it has to pay an annual dividend of around six to seven per cent. The railways also receives extra budgetary resources through IRFC borrowing and investment through the Wagon Investment Scheme and public-private partnerships.
