The Hindu Business Line : Dependence on Exchequer for financing Plans on the rise

CONTRARY to the stated objective of making it a self-financing, commercial undertaking, the ground reality is that the dependence of the Railways on the Exchequer to finance its Plan investments is showing a steadily rising trend.

During the current fiscal, the Centre's Budget support of Rs 7,020 crore is expected to finance 48.4 per cent of the Railways' total Plan size of Rs 13,918 crore. This is 3.5 times the level of Exchequer funding (Rs 1,992 crore) in 1997-98, even as the resources mobilised internally by the organisation have gone up by just Rs 576 crore over this period.

From the Table, it can be seen that while until 1999-2000, the share of internal resources in Plan investment financing was higher than the Budget support component, the situation is now quite the opposite. 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 around 50 per cent in the current 10th Plan period.

The inability to mop up own revenue resources has meant that the Railways, apart from depending on the Government, has had also to significantly rely on borrowings through the Indian Railways Finance Corporation (IRFC). The IRFC basically raises funds from the market, which it employs to procure rolling stock and lease out the same to the Railways. It is estimated that about 50 per cent of the wagons used by the Railways and 46-47 per cent of its coaches and locos are financed through IRFC borrowings.

According to officials, the IRFC route is not cheap, considering that during 2002-03 and 2003-04, the Railways' lease rentals to the corporation amounted to Rs 2,887.08 crore and Rs 3,027.57 crore, respectively. These were incidentally higher than the corresponding sums of Rs 2,517 crore and Rs 2,970 crore raised by the IRFC for these two years. During 2004-05, the IRFC is slated to float additional bonds worth Rs 3,400 crore.

The other source for financing the Railways' Plan has been private investment. But here, the record has been 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 little investment, after showing some promise in the early years of the 8th Plan.