Govt support to railways may rise only 8% in FY14

Even as the government is pushing infrastructure development, its funding for the Indian Railways is likely to rise a paltry Rs 2,000 crore in 2013-14.

When Railways Minister Pawan Bansal presents his maiden Railway Budget next week, the gross budgetary support (GBS) for next financial year might be fixed at Rs 26,000 crore, just eight per cent higher than in 2012-13. For that financial year, government funding had risen 20 per cent compared to 2011-12.

A senior government official told Business Standard, “Though the railways had asked for GBS of Rs 38,000 crore, the Planning Commission has approved only Rs 26,000 crore.”

As the railways didn’t raise passenger fares in the last 10 years and the rise in freight rates was in a piecemeal manner, the dependence of the railways’ plan size on internal resources has fallen. In 2007-08, internal resources contributed 52 per cent to the total plan outlay of Rs 28,980 crore; in 2012-13, this dropped to about 30 per cent. During the same period, the dependence of the railways’ plan size on GBS rose from 48 per cent to 70 per cent.

With the railways going for a freight hike in March 2012, freight earnings in 2012-13 are estimated at Rs 89,000 crore, about 30 per cent more than in 2011-12. It is expected the railways would be in a position to reduce its dependence on GBS and other external borrowing sources.

In 2012-13, the railways had budgeted for a plan size of Rs 60,100 crore. This was expected to be financed by GBS of Rs 24,000 crore, internal resources of Rs 18,050 crore, extra budgetary resources of Rs 16,050 crore and railways safety fund of Rs 2000 crore.

The railways’ plan size has already been scaled down to about Rs 52,000 crore, owing to a cut in internal resources, said a senior railways official.

In the 12th Plan, at Rs 7.35 lakh crore, the proposed Plan investment by the railways is 282 per cent higher than the investment of Rs 1.92 lakh crore in the 11th Plan. Budget 2012-13 had proposed the plan size be met by GBS of Rs 2.5 lakh crore, government support of Rs 30,000 crore for national projects, internal resources of Rs 1,99,805 crore, extra budgetary resources of Rs 2,18,775 crore, dividend plough-back of Rs 20,000 crore and railways safety fund of Rs 16,842 crore.

With GBS of only Rs 26,000 crore being approved for 2013-14, the railways’ hopes of securing Rs 2.5 lakh crore during the 12th Plan are likely to go haywire.