Comment: R Sivadasan, Former Finance Commissioner

A run-of-the-mill Budget in which most projects and initiatives announced are mere repetitions from the previous editions. With a marginally improved surplus, the finance managers of the Indian Railways would have us believe they have begun reviving its fortunes. However, the truth remains that on a sustained basis, they are starving the Dedicated Freight Corridor (DFC), with disastrous consequences for safe train operations.

A surplus of Rs 4,104 crore in the revised estimates contains Rs 2,000 crore diverted from the original estimates for DRF. The Indian Railway Finance Corporation’s (IRFC’s) lease payment (principal) of Rs 2,787 crore is a mandatory liability met from the surplus. After this, what’s left as real surplus is just Rs 1,317 crore, a product of the funds diverted from DRF. Last year’s surplus of Rs 75 lakh was bad enough. This year too, internal generation is negligible. This proves the railways will continue to draw down from erstwhile surpluses unwisely condemned in the white paper. The technique used is to reduce contribution to the already depleted DRF and roll the same money for artificially showing a surplus and somehow maintain an already bad operating ratio.

This inability is all the more alarming in the face of a proposed market borrowing of Rs 20,594 crore through IRFC, including Rs 10,000 crore in tax-free bonds in 2011-12. This exceeds the outlay of Rs 13,824 crore for rolling stock. Can the railways service the lease charges for assets beyond the rolling stock? Unbridled doubling of market borrowing will make it impossible to step up future internal generation. The gross mismanagement of finances is being covered up by invoking the ghost of the Pay Commission and the spiel about railway ministers being reluctant to increase fares.

R Sivadasan,
Former Finance Commissioner