Indian Railways wants a new dedicated fund to provide for non-profitable projects being implemented purely for social inclusion. Year after year, the Railways invests in unprofitable train linkages because of political or social compulsions.

The majority of the Railways' new line projects have been taken up on socio-economic considerations. As of mid-2011, out the 129 ongoing new line projects, only 14 had an over 14 per cent rate of return. About Rs 57,000 crore has been invested in these projects.

The concerns on investing in projects that offer low returns were heightened in 2010-11 when there was a sudden spurt in the award of new lines. In 2010-11, 709 km of new rail lines were built, which is more than the total length of new lines built in 2009-10 and 2008-09. This had upset many Railway Board officials, given that the public sector behemoth is already in financial distress.

PRIORITISING FUNDS

Every year, the Railway officials have to prioritise specific areas where fund balances will be spent. For instance, the Railways has a list 40,000 km of new lines spread across the States, for which surveys have been undertaken since 1947. The cost of undertaking these projects is estimated at Rs 3.6 lakh crore.

Depending on the financial health, the Railway Ministry prioritises where the funds will be spent — in remunerative projects with higher returns or those with social need. The Railways have routed more funds to connect far-flung areas with social objectives. These are lines where Railways will even register losses to keep them running.

In this backdrop, one of the options considered by the Modernisation Committee set up by the Ministry under Chairmanship of Mr Sam Pitroda states: “New dedicated funds should be set up outside the normal budget to provide for non-viable projects being implemented purely for reasons of social inclusion.”

>mamuni@thehindu.co.in

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