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Rlys' reserves come under heavy pressure

Our Bureau

NEW DELHI, Feb. 25

THE Indian Railways is faced with the prospect of a virtual erosion in its reserves position, with the combined balances under various `reserve funds' estimated to fall to a meagre Rs. 253 crores in the current and coming fiscals. This would be the lowes t level ever since 1969-70 when closing balances stood at around Rs. 208 crores.

The Railways currently operates four different reserve funds _ the Depreciation Reserve Fund (DRF), Development Fund (DF), Capital Fund (CF) and Pension Fund (PF) _ which are created out of its annual traffic earnings, with withdrawals going towards meet ing specific expenditure needs.

While the first three funds are used to finance a large chunk of the Railways' Plan investments, the PF is intended to meet the pensionary liabilities of its employees. Of the Railways' total budgeted works expenditure of Rs. 7,332 crores for 2000-01, as much as Rs. 4,003 crores is being financed through withdrawals from the DRF, DF and CF, with the remaining coming as budget support from the Centre.

Normally, withdrawals from these funds for the designated purposes are accompanied by provisions for replenishment of the same in successive Railway Budgets. Till recently, appropriations to the funds exceeded withdrawals, as a result of which the Railwa ys managed to build up sizable reserves aggregating Rs. 3,564.88 crores at the end of 1997-98.

But the position has changed entirely since 1998-99. In 1998-99, combined appropriations to the four funds (including interest income) stood at Rs. 5,252.06 crores, whereas withdrawals amounted to as high as Rs. 7,564.30 crores. Therefore, instead of the normal accretion to the reserves, an actual depletion of Rs. 2,312.24 crores took place that year.

During 1999-2000, the Railways was forced to deplete the fund balances by another Rs. 1,000 crores, including Rs. 600 crores from the DRF and Rs. 200 crores each from the CF and PF respectively to finance its Plan outlay. This would leave the end-year ba lances at Rs. 253 crores, which means the Railways will be left with virtually nothing to draw on a rainy day.

``The idea behind creating the reserves is to ensure that even in a year when earnings are not sufficient, the Railways' capital expenditure programme does not suffer. It is this flexibility to draw-down reserves from previous years' appropriations that is lost in the event of fund balances depleting to abysmal levels'', a senior official explained.