The Hindu Business Line : Railways to pay 6.5% dividend for '06-07

Quid pro quo
The Finance Ministry offered to increase financial support to the Railways by Rs 300 crore if the dividend rate was raised to 7.5 per cent
The Railways has been paying dividend at the rate of 6.5 per cent for the past two years — 2004-05 and 2005-06

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New Delhi Feb. 3 The Railways would have to pay a dividend of 6.5 per cent on its capital-at-charge to the Government for 2006-07.

Capital-at-charge is the contribution of general revenues to the Railways in the form of interest bearing loan capital, except some parts on which no dividend is payable based on relief extended by various Railway Convention Committees.

The Cabinet has approved a resolution moved by the Ministry of Railways in Parliament, for adoption of the Railway Convention Committee's (2004) recommendations in their Fifth Report on Rate of Dividend for 2006-07 and other ancillary matters. The report had suggested adoption of the rate of dividend payable by the Railways to General Revenues, concessions to the quantum of appropriations to the Depreciation Reserve Fund, Pension Fund and determination of interest on the various Railway funds, the Minister of Information and Broadcasting, Mr Priya Ranjan Dasmunsi, told presspersons here.

He said the Cabinet decision would enable the Ministry of Railways to implement the said recommendations of the Railway Convention Committee (RCC).

Recommendation

The RCC of Parliament had recommended that the Railways pay dividend at the present level of 6.5 per cent in 2006-07 against the Finance Ministry's move to increase the dividend rate to 7 per cent. The Finance Ministry also offered to increase the financial support to the Railways by Rs 300 crore if the dividend rate was raised to 7.5 per cent.

The Railways has been paying dividend at the rate of 6.5 per cent for the past two years — 2004-05 and 2005-06 — before which they used to pay dividend at 7 per cent on the capital-at-charge.

The RCC determines the rate of dividend payable by the Railways to the General Budget.

It also recommends on issues regarding the Railway finance vis-a-vis general Government finance.

The comparison is required since the Railway finances were separated from general finance since 1924.

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