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Rs 1,000-cr extra budgetary support a boost to rail plan

Our Bureau

NEW DELHI, Feb. 25

BY managing to obtain an additional Rs. 1,000 crores by way of budgetary support from the Centre, the Indian Railways (IR) have set a Plan investment target of Rs. 11,000 crores for 2000-01, which marks a substantial 22.7 per cent increase over the revis ed Plan outlay figure of Rs. 8,965 crores for the current fiscal.

Even if one compares the Rs. 11,000 crores figure with the budgeted Plan investment of Rs. 9,700 crores for 1999-2000, the step-up in outlay is still significant at 13.4 per cent. The budget support of Rs. 3,540 crores will finance 32 per cent of the Rai lways' proposed outlay in the coming year, which, in fact, marks the highest ever share since 1992-93.

The share of budgetary support in financing the Railways' Plan, which stood at 58 per cent during the Sixth Plan and 42 per cent in the Seventh Plan period, almost halved to 23 per cent during the Eighth Plan. If one takes into account the first four yea rs of the current Ninth Plan period (beginning 1997-98), there has been a partial recovery in the contribution of budgetary support to nearly 28 per cent.

The Rs. 1,000-crore enhanced capital contribution from the general exchequer for 2000-01 is even more significant if one also views it in the context of the Railways' having to cough up a dividend of just Rs. 615.38 crores to the Centre. This, in turn, h as been made possible by the Railways deferring dividend liabilities to the tune of Rs. 1,500 crores payable during 2000-01 for the future.

If one subtracts the dividend payments to be made by the IR to the Centre _ which actually is a fixed seven per cent charge on the cumulative capital invested by the latter _ the net budgetary support in 2000-01 works out to Rs. 2,925 crores, compared to Rs. 635 crores in 1999-2000, Rs. 458 crores in 1998-99 and Rs. 503 crores in 1997-98. The net budgetary support for the entire Eighth Plan period stood at just Rs. 368 crores, with some years even witnessing negative budget support from the Centre (Rs. -322 crores in 1993-94, Rs. -217 crores in 1994-95, Rs. -126 crores in 1995-96 and Rs. -42 crores in 1996-97).

It is this huge savings on dividend outgo that has given the Railways the leeway to finance a bigger plan even while not having to increase dependence on internal resource generation (IRG). As the Table shows, the share of IRG in financing the Plan is sl ated to drop from 43 per cent in 1999-2000 (Budget Estimate) to just 34 per cent in the coming fiscal, with the absolute figures, too, falling from Rs. 4,160 crores to Rs. 3,792 crores.

For 1999-2000, the IRG target of Rs. 4,160 crores is expected to fall short by Rs. 735 crores. Given that the Railways have budgeted for a smaller internal resource generation in the coming fiscal, the possibility of the Plan target of Rs. 11,000 crores not being realised seems unlikely.

The disturbing feature of the 2000-01 Rail Budget, however, is the massive Rs. 3,400 crores of borrowings that is proposed to be raised through the Indian Railways Finance Corporation (IRFC) route. While the share of IRFC borrowings in financing the IR's Plans averaged only 15 per cent in the Seventh Plan and 17 per cent in the Eighth Plan period, in the first four years of the current Plan, these have amounted to 27 per cent, 33 per cent, 32 per cent and 31 per cent respectively. Whether this shift is desirable is a moot point, especially given the virtual ``debt-trap'' position confronting the Railways.

The other striking feature for the coming year is the virtual go-by given to private investment in the form of Build-Operate-Lease-Transfer and Own-Your-Wagon scheme. These two schemes are together expected to generate investments of just Rs. 268 crores in 2000-01, as against Rs. 559 crores in 1997-98.