The Hindu Business Line : Rlys dependence on Exchequer on the rise

CONTRARY to the stated objective of making the Railways a self-financing, commercial undertaking, the ground reality points at a steadily falling share of internal resources and increased dependence on the Exchequer in funding its Plan investments.

During the current fiscal, the Centre's Budget support of Rs 7,377 crore is expected to finance about 53 per cent of the Railways' total Plan size of Rs 13,918 crore.

This marks a near four-fold jump over the Exchequer funding of Rs 1,992 crore in 1997-98, even as the resources mobilised internally have gone up by barely Rs 90 crore over this period.

The picture is no different during the coming fiscal, where Budgetary support from the Centre is expected to finance 49 per cent of the total Plan of Rs 13,425 crore.

Over a longer period, while the share of monies from the Exchequer in financing the Railway's Plan went down from an average of 42 per cent in the 7th Plan (1985-86 to 1989-90) to 34.5 per cent during the 9th Plan (1997-98 to 2001-02), it has surged to over 50 per cent in the current 10th Plan period.

Correspondingly, the share of internal resources generation has steadily fallen from 43 per cent to 35 per cent and about 25 per cent during the current Plan period.

Besides Budget support and internally generated resources, the other major source of financing the Plans have been borrowings through the Indian Railways Finance Corporation (IRFC), which is scheduled to float bonds worth Rs 3,000 crore in the coming fiscal.

While the prevailing low interest rate regime may render this a seemingly sensible option, the fact is that the Railways is already on the verge of a debt trap.

Lease rentals to the IRFC are expected to be around Rs 3,200 crore in 2004-05, which is actually higher than the budgeted borrowings of Rs 3,000 crore.

As for inviting private participation for financing Plan investments, the story is rather discouraging, to say the least.

For the coming fiscal, the Railways hopes to garner investments totalling a mere Rs 50 crore under the build-operate-transfer (BOT) and own your wagon (OYW) schemes.

These schemes have attracted very little investment, after showing some promise in the early years of the 8th Plan.