Setting its eyes on infrastructure development, the Union Ministry of Finance has asked the railways to raise borrowings, with the assurance that it will pay the principal amount. The railways will have to pay the interest.
According to sources, a final call on this would be taken when the national carrier asks for additional sums to be allotted to it in the form of Gross Budgetary Support (GBS), or when it appeals to the finance ministry to repay both the principal and the interest. “We are in talks with the department of expenditure to take a call on this soon. It needs to be seen what their decision would be after the issue was discussed at the economy review meeting chaired by Prime Minister Narendra Modi on September 15,” said an official source.
In the Union Budget, the government had cut the budgetary support for the railways for 2017-18 by Rs 150 billion, and provisioned Rs 531 billion for 2018-19, compared to over Rs 550 billion in the budget for 2016-17. This is expected to create a shortage of at least Rs 2 trillion in the mega investment plan of Rs 8.56 trillion, drawn up by the Narendra Modi-led NDA government for the period between 2015 and 2019. “Our debt servicing expenses are increasing. In addition to this, we have the social subsidy burden. We do not want to opt for further borrowings on our own,” the official added. According to this year’s Union Budget, the debt servicing expenses is expected to increase by 12 per cent to around Rs 192 billion in 2018-19, compared to Rs 170.7 billion in the previous financial year. For the current financial year, the railways have drawn up a capital expenditure plan of Rs 1.48 trillion, out of which 38 per cent is expected to come from borrowings.
Following the merger between the Railways and the General Budget in 2017, the government has waived off dividend for the railways. However, sources said with the increasing expenses and the need to raise funds internally for modernization.
Out of the Rs 8.5-trillion investment plan calked out by the Modi government, GBS was around 30 per cent, debt was almost same at 28 per cent. The railways claim to have arranged half of the amount so far, of which Rs 1.99 trillion is supposed to be spent on network de-congestion and to construct dedicated freight corridor. Two projects — station redevelopment for Rs 1 trillion and Rs 650- billion high-speed rail corridor construction — are yet to take off.