Railway told to pay 4 per cent dividend for 2015-16

Keeping in mind the Seventh Pay Commission's recommendations, Railway Convention Committee has proposed for 4 per cent dividend for railways in the 2015-16.
We have recommended the rate of dividend for 2014-2015 at 5 per cent and for 2015-16 at 4 per cent keeping the imminent impact of pay Commission, Committee chairman Bhartuhari Mahatab said after releasing the panel's two reports.
The Committee, which came into existence in April this year, tabled the reports in Parliament today.
In 2007-08 and 2008-09, the rate of dividend was 7 per cent each, in 2009-10 and 2010-11 it came down to 6 per cent each; in 2011-12 it was reduced to 5 per cent and in 2012-13, it was fixed at 4 per cent. In 2013-14, it was increased to 5 per cent.

For the year 2014-15, Railway Ministry has requested that the rate of dividend may be fixed at 4 per cent and for the subsequent five years from 2015-16 to 2019-20, payment of dividend may be waived of completely.
The Finance Ministry on the other hand, has suggested that the rate of dividend may be increased to seven per cent.

However, BJD MP Mahtab said "Railways should pay dividends. It may be less or more. But it is not wise enough to waive dividends."
In view of the overall financial health of the Railways, as also the need to urgently develop railway infrastructure, including modernisation and safety related work, Committee has recommended that for the year 2014-15, the rate of dividend be determined at 5 per cent and for the year 2015-16, taking into consideration the imminent impact of the recommendations of the 7th Pay Commission, the rate of dividend be determined at 4 per cent," the report said.

The social obligations of the Indian Railways at present works out to more than Rs 30,000 crore on account of below cost passenger and coaching fares, uneconomic branch lines, concessions granted to various categories of people etc.
The impact of the 6th Central Pay Commission was more than Rs 1 lakh crore upon the Railways. The Recommendations of the 7th Pay Commission would further aggravate the financial health of the Indian Railways.
When reliefs given to the Railways for various public service obligations are taken into account, the effective rate of dividend is of the order of 2 to 3 per cent, according to the parliamentary panel.

The Committee have also recommended that all concessions on dividend relief now available on residential buildings, new lines be allowed to continue on the existing basis for the year 2014-15 and 2015-16.
The Committee have endorsed the Railway Ministry's suggestion for appropriation and interest to various Railway Funds.