The Hindu Business Line : DA merger to cost Rlys Rs 1,100 cr

THE decision to merge the dearness allowance (DA) with the basic pay of Central Government staff will cost the Railways nearly Rs 1,100 crore, which will have to pay over Rs 20,000 crore as salary and pension in 2004-05.

"We have calculated the impact (of the DA merger) at about Rs 1,100 crore. We will absorb it internally," the Chairman of the Railway Board, Mr R.K. Singh, told Business Line.

The Railways' total savings in the current fiscal are likely to be Rs 1,490 crore as per the revised estimates presented along with the interim Railway Budget last month.

Even if the Railways is able to squeeze an equivalent amount from its working expenses in the next fiscal, the additional burden on account of the merged DA will wipe out most of the savings cushion next year.

While the exact salary bill of the Railways is not available, as a thumb rule wages, allowances and pension accounts for over 47 per cent of the total working expenditure.

On whether the pressure on the Railway's finances will prompt an increase in passenger fares and freight charges when the new Government presents the Budget for 2004-05, another senior Railway official said that fare hikes are always political decisions.

"We cannot cross the bridge before we reach it. While it is clear that the Railways' finances are under tremendous strain, the increased DA payout will only worsen the situation. But whether that comes from higher fares can only be decided after the general elections."

Being an organisation with over 15 lakh employees, even a minor increase in salary expenditure leaves a major dent on Railway finances, the official said, adding that the implementation of the Fifth Pay Commission recommendations had derailed Railway finances five years ago.

The Railways' projected pension payment for the next fiscal alone stands at Rs 6,390 crore, which is 15.5 per cent of the working expenditure.

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DA merger to cost Rlys Rs 1,100 cr