Within days of the Centre stating that the Parliamentary Railway Convention Committee (RCC) will be wound up, the Committee’s Chairman Bhartruhari Mahtab has raised concerns on the extent to which Railway financials can be saved by this move.

He expressed apprehensions that by being merged with the general Budget, there will be more pressure to convert it into a social organisation — in effect increasing the social obligation for the Railways — and may also burden government finances.

Populist decisions are likely to be passed along with the Budget in the din of the House without much discussion through a voting or even a voice vote, he feared.

The RCC met for the first time on Tuesday with Railway Ministry officials. Mahtab told BusinessLine that he hoped the merger of the Railway Budget does not end up “being an ad-hoc decision”, with the Railways ending up like another government “department”, such as Rural Development, Civil Aviation and Urban Development.

Unlike other departments, the Railways, the national transporter, generates enough resources to pay the salary and pension of its 13 lakh staff and almost as many pensioners. He termed the decision to merge the Railway Budget with the general one “political” in nature, particularly in the context of the timing. How will the Railway Minister stand up and say that there are no profits in the context of the Seventh Pay Commission, he asked?

Although the government has put additional staff and pension costs due to Seventh Pay Commission at ₹32,000 crore, Mahtab estimated that the overall impact of the Seventh Pay Commission will go beyond ₹40,000 crore. The so-called budgeted profit of 6-7 paise for each rupee will evaporate this year, he stated.

The RCC, which was set up as a Convention after the separation of railway finances from the general finances, did not just define the dividend that railways paid on the entire capital at charge to Finance Ministry, it also went into various other aspects of railway finances.

For instance, one of the RCC’s recent reports was on Indian Railway Finance Corporation and its SPVs. In this report, the RCC focussed on the funds deployed in various companies created by the Railways with borrowed funds and the returns generated by such projects.

There are questions that need to be answered, said Mahtab. The Railways raises funds from the market. It also has companies that pay dividend. What will happen to the salary structure of Railway employees?

Stating that the Railway Board has to have full autonomy, he noted that it is high time the Railways revised its fares. For instance, Cuttack-Puri, of say 67-70 km, can be covered for ₹50-55 by bus, and ₹20 by train. Similarly, Delhi-Chandigarh can be covered for ₹350 in buses and ₹70-80 by train. It is high time that fares are rationalised, he said.

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