The Railways have paid even less dividend for 2000-01 than what had been recommended by the railway convention committee (RCC).
While RCC had asked for a deferment of dividend of only Rs 1,500 crore for the fiscal and had pegged the net payment at Rs 587 crore for 2000-01, the department has paid even less.
As a parliamentary panel RCC decides the level of dividends payable by the Railways each fiscal. The dividend is a return for the investment made by the government towards the department from general revenues.
According to the Railways, the deferment was necessary as the department was in the red and needed the funds to pay for over Rs 21,000 crore of expenditure on various projects.
The finance ministry had also agreed to the sum, just as it has agreed to a deferment of Rs 1000 crore dividend in the current fiscal "to enable the railways ministry to take necessary measures to improve their finances". However, he had said that such deferments put tremendous strain on general revenues.
But the Railways has paid only Rs 386 crore to the exchequer instead of Rs 587 crore. The move was confirmed by the Railway Board which said it has raised the exempted dividend to Rs 1,823 crore.
According to sources, since the Railways as a commercial undertaking have access to tax-free concessional capital, the dividend is calculated at seven per cent per annum.But the effective rate of dividend after excluding subsidy element is only 4.21 per cent. It is sharply lower compared to the average borrowing rate of the Centre at 10.77 per cent. In such context, they say, a reduction in the committed dividend is not a happy augury.
