The Railways ministry has decided to rationalise project allocation among states in the forthcoming budget (on February 26) by announcing a formula to guide their sanctions. This will mean that the fund-strapped ministry will announce very few projects for line expansion and major bridges in the budget.
Highly-placed sources in the ministry said, while the railways is already bound by a Cabinet decision of not announcing any projects without an ex-ante Cabinet approval, the formalisation of a policy to allocate projects will eliminate the vestiges of ad hoc project announcements in the budget and in the course of the year.
The move is a radical departure from the past with the ministry apparently reconciled to the idea of giving away its discretion in order to introduce "strict discipline" in allocation of funds and projects.
The ministry is saddled with a pending project shelf of over Rs 33,000 crore, which has severely crippled its freedom to work out a feasible set of investment proposals to increase the revenue stream. Sources said there is currently no workable method to jettison the unviable projects from the pending list.
The proposed formula is likely to be patterned on the lines of the inter-state plan fund allocation formula of the Planning Commission. The factors that will be included will be state population, the rail network already available , per capita income and the traffic potential.
The method would curb the tendency of the successive railway ministers to exercise their discretion in allocating funds and projects to their home states in a big way.
Sources admit that they have been grappling with "unrealistic figures" of the previous budget while formulating this year's budget. "We cannot carry on with this populism and some radical decisions would have to be taken" they say. They said railway minister Nitish Kumar has made it clear to all delegations he met recently that he was bound by the cabinet decision which would not allow the minister to use his discretion on announcing new projects in the railway budget. In their pre-budget meetings the plan panel has also asked the ministry to prioritise their projects.
Because of the severe fund crunch the railways has made no allocation to the railway reserve fund, and depreciation reserve fund over the past few years. It has asked for a gross budgetary support of Rs 29,650 crore for the tenth plan, 2002-07, against the Rs 14, 445 crore allocated for the ninth plan. This includes the diesel cess.
