The cash-strapped Railways has finally managed to get the approval of the Finance Ministry for a loan of Rs 3000 crore against the demand for Rs 10,000 crore.
"We were seeking a higher loan, including a waiver on the dividend payment [of about Rs 1,200 crore]," said sources in Railways.
Railways had deferred the dividend payment once before,in 2001-02 during Nitish Kumar’s period at the ministry.
Railways had demanded Rs 10,000 crore from the Finance Ministry to meet the requirement of different zones.
The Finance Ministry will be giving a loan to railways after many years. The interest rate would be 8.5% and the loan was expected to be repaid in two to three years.
According to the loan stipulation, the amount would be spent prudently in different railway zones for enhancing performances.
The Finance Ministry had earlier rejected the Railways request for a "bridge" loan of Rs 2100 crore in September last year. The loan was to meet the national transporters' development expenses.
Railways is facing a financial crisis due to an increase in expenditure on account of payment of Pay Commission arrears and increased fuel prices.
In 2011-12, the government has extended Rs 20,000 crore as gross budgetary support for the railway plan, besides Rs 1,041 crore from fuel cess.
Seeking government support for railways modernisation plan, Railway Minister Dinesh Trivedi had also met Prime Minister last week.
