Railway expenses increase 19% on pay, pensions

Seventh Pay Commission to hit spending on infra development

The railways' expenses will jump 19.16 per cent in the coming year because of pay and pension recommended of the Seventh Central Pay Commission.

Retirement benefits comprise 27 per cent of total expenses in 2016-17, leaving much of railway infrastructure without adequate funding.


One of the major investments by the Indian Railways - Dedicated Freight Corridors - has received considerably low Budget support. Against a budgeted investment of Rs 7,500 crore for dedicated freight corridor projects in 2015-16, it ended the year with an investment of less than half at Rs 3,500 crore.

Similarly, for new lines, the provision for next year is at Rs 15,586 crore, up 15 per cent over the revised estimate for 2015-16, and much higher compared to the Budget Estimate of Rs 12,830 crore.

The total working expenses of the railways are budgeted at Rs 174,046.29 crore during 2016-17, up from Rs 146,055.6 crore in 2015-16, the highest year-on-year growth in the past three years.

Increasing 36 per cent over last year, Rs 47,170.76 crore will go into provident funds, pensions and other retirement benefits of railway employees. Expenses on retirement benefits have increased by over 84 per cent since 2013-14.

Investment in rolling stock has increased to Rs 27,278 crore in coming financial year from Rs 19,087 crore in 2015-16.

The railways said staff costs would rise Rs 15,950.22 crore, on account of the pay commission. This includes salaries, including arrears, dearness allowance, and other staff costs prescribed in the new pay norms.

With an increase in the number of pensioners, the pension outgo has risen to Rs 12,638.05 crore, says the Railway Budget for 2016-17.

Railway Minister Suresh Prabhu said on Thursday these were challenging times because the railways were facing low freight demand, a commodity cycle downtrend, and rising expenses.

Other expenses that have risen are material cost, maintenance of assets, repair of rolling stock, and contractual payments, all on account of increasing market rates.

The second highest railway expense is on traffic at Rs 26,310 crore, up 27 per cent from last year. Expenditure on general services will jump 30 per cent to Rs 8,316.84 crore, the highest in the past three years. Expenditure for staff welfare and amenities are pegged at Rs 6,622 crore, up 21 per cent from a year ago.

Fuel expenses have declined at their fastest pace in three years to Rs 23,417 crore. Fuel expenses are 15 per cent of total railway expenses and these shrunk 12 per cent from a year ago. Falling prices of diesel and electricity, coupled with the railways procuring cheap power through open access, led to the decrease in fuel expenses.