Railways eyes 24% increase in capex target this financial year

The Indian Railways is hopeful of exceeding its budgeted capital expenditure target of Rs 1.21 lakh crore for the current financial year (FY17) by around a fourth to Rs 1.5 lakh crore, the highest-ever in the transporter's 160-year old history. The national transporter is also working on a plan to get over the current problem of project-linked spending in order to get more flexibility.

Drawing up a plan to implement the ambitious move of increased spending this year, the rail ministry would seek parliamentary approval for the extra spending, an official said.

ON FAST TRACK

• Railways is also working on a plan to get over the current problem of project-linked spending in order to get more flexibility
• The gross budgetary support for 2016-17 is currently budgeted at Rs 34,000 crore
• The increased spending is likely to be on capacity building and safety works
• The rail ministry’s budgeted plan outlay went up from Rs 65,000 crore in 2014-15 to Rs 1,00,011 crore in 2015-16

"This year (2016-17), our capital expenditure will be certainly more than the budgeted Rs 1.21 lakh crore. We will not have to grapple with the constraints that delayed spending on projects last financial year. At present, we already have sanctions for projects involving Rs 5.6 lakh crore of spending out of the targeted Rs 8.5 lakh-crore capex over five years," Railway Minister Suresh Prabhu told Business Standard in an interview, without disclosing the expected upside in capex.

A senior official from the ministry, however, said they were trying to stretch capex by 24 per cent to Rs 1.5 lakh crore.

"If all goes well, we will be able to approach Parliament with a supplementary demand around July. We have already started basic structural reforms to make it possible by seeking flexibility in sources of funds that can be deployed against specific demands," he said.

Finance Minister Arun Jaitley had earlier this week told Business Standard his ministry would be "delighted" to give more budgetary support to the railways if required. The gross budgetary support (GBS) for this financial year is budgeted at Rs 34,000 crore.

The increased spending is likely to be on capacity building and safety works.

The current rules of financial propriety dictate that the railways utilise funds allocated for a particular demand only against the budgeted head. They now want the flexibility to divert unused funds against specific demands in other works where allocated funding falls short of requirement.

"This flexibility will significantly increase our infrastructure spending ability and speed up works," the official said.

This will require changing rules monitored by the Railway Board, ministry of finance, Comptroller and Auditor General of India, ministry of finance and the Railway Convention Committee.

Capital expenditure has been a sticky area for the Indian Railways that operates the world's fourth largest rail network. The rail ministry's budgeted plan outlay went up from Rs 65,000 crore in 2014-15 to Rs 1,00,011 crore in 2015-16. The Prime Minister's Office (PMO) had last year pulled up the ministry for lack of spending on key projects.

The rail ministry claimed having achieved Rs 93,000 crore of capex in the last financial year and set the budgeted outlay for the current fiscal year at Rs 1,21,000 crore, 21 per cent higher than the budgeted outlay for 2015-16.

Besides GBS, the 2016-17 budgeted outlay includes Rs 17,000 crore of internal generation, Rs 10,700 crore for the safety fund and Rs 59,000 crore to be sourced from extra budgetary resources.