States may be told to use stamp duty for rail project

Rs 20,000 cr project to link remote areas

The government may ask states to keep aside 2 per cent of the revenue collected from stamp duty on property registration annually for the Rs 20,000 crore Sudoor Kshetra Rail Sampark Yojana.

The programme was announced by the previous government in February and was known as the Remote Area Rail Sampark Yojana. The programme, spread over five years, aims at extending the rail network to remote areas.

The project will be funded through budgetary support, fuel cess and debt. The government would not dip into freight and traffic receipts for funding the project, railway ministry officials said.

About Rs 10,000 crore will be raised by securitising the budgetary support, earnings through fuel cess and collections made by the state government. The ministry has also proposed that the Centre can fund about a fourth of the total project cost.

The ministry has already demanded Rs 1,500 crore next fiscal year for financing the project. The project, though announced in February, has been delayed because of objections over the funding pattern.

States are against using stamp duty collections for the project. This is in light of the fact that under the urban reforms plan being undertaken by the government, states are expected to reduce stamp duty to 5 per cent.

Railway officials argued that states would also benefit from this programme. "Greater connectivity will bring in more trade and hence more revenues. We are still discussing the issue with the states," an official added.

Fuel cess has also been a sore point. The objection has been that another surcharge, in addition to the Rs 1.50 per litre on petrol and diesel, will put pressure on fuel prices.

The official said the railways would divert half of the existing accruals to the ministry from the fuel cess. The railways annually get about Rs 400 crore from fuel cess, which is supposed to be used for building rail over-bridges.

For directing a part of the cess towards this programme, the government will have to amend the Central Road Fund Act, which lays down the appropriation pattern of funds between railways, national highways and rural roads.