Parl. Committee Expresses Concern over Decline in Railways’ Internal Resource Generation

New Delhi, Mar 4: Expressing concern over the sharp decline in generation of internal resources which has resulted in greater dependency on budgetary support and on market borrowings by the Railways, a Parliamentary Committee has recommended the need to escalate efforts in the matter by the Railway Ministry to ensure requisite revenues for carrying out the intended objectives.  

In its latest report, the Standing Committee on Railways has observed that the contribution of internal resources to total capital outlay was Rs 12,125 crores or 11.03% in 2016-17. It was reduced to Rs 3070 crores or 3.1% of the total outlay in 2017-18.

This trend was repeated in 2018-19 with only 3.5% of the budget being financed through the internal resources share of Rs 4663 crores. The situation became even more acute with only 3.2% (Rs 5000 crores) being kept for internal resources in the revised estimate for 2019-20. For 2020-21, the target is an ambitious Rs 7500 crores or 4.6% of the budget.

Reduction in average passenger booking and freight targets are some of the reasons cited by the Railways for decline in internal resource generation during this period.

The committee, headed by Bharatiya Janata Party (BJP) Member of Parliament (MP) Radha Mohan Singh, has also expressed concern over the losses incurred by the Railways in passenger services, purportedly due to social service obligations and cross-subsidization from freight.

The Parliamentary Panel has sought the state-run transporter to explore diversification of its freight business so that it does not remain fully dependent on carrying traditionally bulk commodities like cement, coal, and iron ore.

The committee is of the firm opinion that such diversification would enable the Railways to increase their market share in the freight business which in turn results in enhancement of gross traffic receipts.

According to the Railways, in the financial years 2018-19 and 2019-20, goods earnings were hit by a slump in demand for major commodities like coal and cement, which have traditionally been the mainstay of the national transporter's freight basket.

The 11-member committee has observed that the Operating Ratio of Indian Railways had consistently been high at above 96% since 2016-17.

Since the Operating Ratio is a function of total working expenditure to total traffic earnings, and any effort to improve the same revolves around maximizing traffic earnings and minimizing the controllable working expenses, the committee has recommended that Railways should observe more fiscal discipline and plug leakages. It also advised that Railways’ finances be better monitored and managed prudently so that the Operating Ratio is brought down to a reasonable level in the near future.

The committee noted with concern that there have been major shortfalls in gauge conversion (meter gauge to broad gauge) during the last few years.

According to the report, as opposed to a target of 1000 kms gauge conversion, only 596.8 kms was achieved in 2018-19. In 2019-20, the target of 600 kms in the Budget Estimate was reduced to 400 kms in the Revised Estimate. Even this could not be achieved as the actual gauge conversion was 345 kms till January 2020.

Taking a critical view of the apparent lack of progress in gauge conversions, the committee recommended that the Railways exercise due diligence, identify and remove all those impediments that obstruct network expansion in order to achieve targeted gauge conversions seamlessly.