Railways to revive capital fund

The railways have offered to repay about Rs 1,800 crore of deferred dividend it owes to the government in one go. It has, however, asked the finance ministry to give the same amount as a grant for social sector projects.

Ministry sources said the railways wanted to revive the Railway Capital Fund (RCF) and needed extra resources to be directed towards this fund for the development of assets. The RCF ceased to exist in 1997-98, as the railways did not have enough resources.

If the government does not agree to the proposal, the railways would have to make a cut in its market borrowings through Indian Railways Finance Corporation (IRFC), ministry sources said. The Railways had planned to borrow Rs 3,400 crore from the markets during 2005-06.

"We have a cash surplus at present and would like to repay our liabilities to the government," a ministry official said.

He, however, added that there were many economically unviable projects that the railways had to take up for social reasons, for which it still required resources.

He added that, while the finance ministry was ready to give about Rs 500 crore as a grant for the purpose, the ministry was negotiating for a higher amount.

Till June 2005, the railways registered an impressive 14.58 per cent growth in its earnings to Rs 12,618 crore, with its revenues from transporting goods going up by 18 per cent to Rs 8,368 crore. Even the passenger earnings grew at nearly 9 per cent to Rs 3,808 crore.

The railways pay a dividend on the government support it gets every year. In 2000-01, about Rs 1,823 crore of dividend payment was deferred due to financial crunch the Railways was facing. In 2001-02, Rs 1,000 crore was deferred.

The railways had paid Rs 950 crore of the deferred liability by 2004-05 and was projected to pay another Rs 300 crore this year. With a good performance in the goods and passenger segment, the railways wants to clear its balance sheet by paying the remaining Rs 1,873 crore in a single year.