Financial Daily from THE HINDU group of publications
Saturday, Feb 25, 2006
Financial Daily from THE HINDU group of publications Saturday, Feb 25, 2006 |
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Railways Industry & Economy - Railway Budget Railways to pay lesser dividend Our Bureau
New Delhi , Feb. 24 Mr Lalu Prasad may have presided over a `historic turnaround' in the financial position of the Indian Railways by generating an unprecedented Rs 11,000 crore of fund balances, against a measly Rs 350 crore in 2001. But this is no cheer for its owner, the Union Government, which would not be earning much by way of extra dividend. During 2006-07, the Railways would be paying a total dividend of Rs 3,870.73 crore, which is lower than the Rs 3,938 crore that was budgeted for the current fiscal. And if one accounts for the deferred dividend component of Rs 663 crore (this was only Rs 300 crore in the budget estimate for 2005-06), it means that the effective outgo in the coming fiscal would actually be 3,207.73 crore, which is Rs 430 crore less than what was budgeted for 2005-06. The main reason for lower dividend liability is the Government's decision to accept the recommendation of the Parliamentary Railway Convention Committee to reduce the dividend rate to 6.5 per cent of the capital-at-charge. The latter represents the cumulative budget support extended by the Centre to the Railways over the years. Till recently, this rate was pegged at 7 per cent. The decision to lower the rate to 6.5 per cent led to even the revised figure of dividend outgo for 2005-06 being only Rs 2,929.65 crore, whereas it was budgeted at Rs 3,638 crore. In other words, a hit of Rs 708 crore.
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