Financial performance falls short of expectations

Presenting the 2014-15 interim Railway Budget on Wednesday, minister Mallikarjun Kharge started his speech with an Urdu couplet. He said all he would say was the truth. And, as the cliche goes, the truth is bitter.

For 2013-14, Indian Railways reported a dismal financial performance, with its surplus expected to fall four per cent to Rs 7,943 crore. Despite the lower surplus, the railways is not only paying the government 28 per cent higher dividend of Rs 7,840 crore this year, it is also promising a 16 per cent increase next year. This is despite providing Rs 300 crore less for the depreciation reserve fund and no provisioning for the capital reserve fund.

Loaded with the burden of higher salaries and pension, the railways spent about Rs 91 to earn a hundred. "Total additional payouts, including arrears from January 1, 2006, stand at more than Rs 1 lakh crore…But for the additional financial burden caused by the Pay Commission, the resource position of the railways would correspondingly have been that much healthier," Kharge said. However, the railways hopes next year, the growth in expenditure will be less than its earnings and, therefore, the earnings-to-spending ratio will improve to 89.8 per cent.

Though the overall railways expenditure was 13 per cent more than expected, the fall in surplus also resulted from low passenger volumes and falling average lead in commodities. A rise of about eight per cent in fuel expenditure worsened matters.

The 2013-14 Budget estimate for gross traffic receipts was Rs 1,43,742 crore. Now, it is likely these will stand at Rs 1,40,450 crore. As a result, allocation to the development fund was reduced to Rs 2,675 crore; the 2013-14 Budget had targeted appropriation of Rs 3,550 crore. Allocation towards the capital reserve fund had been estimated at about Rs 5,000 crore in Budget 2013-14.