Centre slashes funding to Railways by Rs 12,000 crore for ‘poor pace of work’

The Railways had also requested the Finance Ministry to share its burden of having to keep its fares low and carry essential goods either cheap or even free of cost.

Written by Avishek G Dastidar | New Delhi | Published: January 6, 2016 2:38 am


railways cut, arun jaitley, pay commission, 7th pay commission, railway budget, india news, railways fund cut, railways funding Finance Minister Arun Jaitley

Citing poor pace of work in the Railways, the government has cut the gross budgetary support to the national transporter by Rs 12,000 crore for this financial year, effectively not giving any increase in Central funding this year.

The decision comes as a jolt to the national transporter, which is already struggling with capital expenditure, decreased earnings and a huge salary bill, due to the 7th Pay Commission proposals.

Through a letter to the Railways on Tuesday, the Finance Ministry not only cut Central funding by Rs 12,000 crore to bring it down to Rs 28,000 crore, it also refused to help Railways with any funds to meet its salary/pension liabilities arising out of the pay commission recommendations this year.

“… it may be stated that the ceiling of Rs 28,000 crore for Plan Expenditure in Revised Estimate 2015-16 is fixed after careful review of pace of expenditure and the resource position of the government,” said the letter from the Finance Ministry to the Railways.

The Railways, meanwhile, has decided to approach Prime Minister Narendra Modi for a solution since its financial position, due to shortfalls in earnings and a precarious operating ratio, remains on the edge.

The last Union Budget had seen Central funding of Rs 40,000 crore to Railways — the highest ever.

The Finance Ministry letter comes three months after the PMO wrote to Rail Minister Suresh Prabhu highlighting a lack of pace in the execution of works in Railways reflected through its capital expenditure.

The Finance Ministry has also told the transporter that the Centre will not be able to help it financially to run its household, and that railways should raise its own resources for the same.

“Since the liability of the General Revenues towards implementation of the recommendations of the 7th Pay Commission is much larger in comparison to Railways, it is not feasible to finance Railways on this account,” the Finance Ministry has said.

In addition, the Railways has been advised to raise its own resources to meet its liabilities. “As a departmentally run commercial organisation, Railways is expected to meet its revenue expenditure from its revenue receipts,” said the letter issued with the approval of Secretary (Economic Affairs).

The Railways had also requested the Finance Ministry to share its burden of having to keep its fares low and carry essential goods either cheap or even free of cost.

The cost of this obligation has reached Rs 32,000 crore. But this letter decidedly puts an end to that bargaining as well.

Trouble for Railways is not over because so far it has been able to spend only about 44 per cent as capital expenditure with just three months to go — way behind its target of Rs 1 lakh crore. Moreover, taking away Rs 12,000 crore suddenly compounds the problem because the national transporter may have already booked much of the expenditure towards works.

Against this backdrop, the Railways will now seek the PM’S intervention ahead of Union Rail Budget next month.


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  1. A
    Adrian Akau
    Jan 6, 2016 at 12:37 am
    ",,poor pace of work..." means that projects were not started or completed as scheduled. Either the funds were insufficient or they were drained away into officials pockets, as is normal for this nation.
    1. K
      Jan 6, 2016 at 12:31 am
      Funding for the poor travellers all over India reduced by 12,000 crores. AT the same time, the crouching, dokhla-eating Gujjubhai has fast-tracked the bullet train from Mumbai to his own state costing to the Indian taxpayers Rs 98,000 crores (which will easily blow out by another 50%).
      1. G
        Jan 6, 2016 at 5:45 am
        and they have lakhs of crores for bullet trains!
        1. S
          SK Gupta
          Jan 5, 2016 at 10:06 pm
          Jaitley is not an effective minister. Jaswant Singh was the best, in Bjp' s earlier term. Media has blanked news about his health.
          1. Hemen Parekh
            Jan 6, 2016 at 6:55 am
            Fear of Being Ridiculed ? Many a great ideas have remained unexpressed due to fear of being ridiculed But there have been notable exceptions Idea whose time may not have come but that did not prevent its proponent to speak up - even at the risk of being ridiculed IDEA : Abolish Personal Income tax in order to solve the twin problems of black money and corruption , for ever BRAVE HEARTS : Nani Palkhiwala Ram Jethamalani Subramanyam Swamy When scions of business / industry meet Shri Arun Jaitleyji today , to give their suggestions in respect of Corporate Income Tax provisions in the forthcoming Union Budget , will any of them have the courage to advocate : * Abolition of Personal Income Tax ( Revenue loss of Rs 2.5 lakh*Crores ) * Reducing Corporate Tax rates with rise in no of employees ( Incentivize Job-Creation ) * 10 % of GST collection to get credited in PPF accounts of the Buyer of Goods / Services * GST rate increase (in coming years) to be no more than 5 % of CPI rise in previous year * No questions ( as to the Source ) for cash deposited in Jan Dhan Bank Accounts { Permanent Unlimited Amnesty } * FD Interest / Dividends from Infra Bonds / SPVs to be credited to Jan Dhan A/cs * Introduction of 2 % Bank Transaction Tax ( Revenue gain of Rs 15 Lakh*Crores ) * Announcement of " Start Up Act / 2015 " ( read... hemenparekh / Blogs ) * Introduction of Rs 500/1000 currency notes with embedded RFID / unique IP Address I hope those Business Leaders / Industrialists will take courage from the fact that , initially , all ideas get ridiculed which are aimed at , * Upsetting the existing Social Order * Threatening the vested interests * Destroying the cozy comfort * Democratizing the Economic Powers Then a time comes when those very ideas are appreciated and , later, even admired ! Please , do not miss your " Tryst with the Destiny " ! ------------------------------------------------------------------------------------------------------- hemen parekh 06 Jan 2016 ( Source : hemenparekh / blogs )
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