Rs 79,398 crore Covid-loan: Govt gives two-year moratorium extension to Railways

The issue was first reported by The Indian Express on January 28, where Ministry of Railways had requested to convert the special loan of Rs 79,398 crore into a grant. However, during the pre-budget consultations, the Ministry of Finance had turned down the request and agreed to give another two years of moratorium.

The documents of Budget 2021-22 show that a “special loan” of Rs 79,398 crore was extended to the Railways for “COVID-related resource gap” in 2020-21 and to meet the pension expenses of 2019-20. The opening balance of Railways’ pension fund for 2020-21 showed a deficit of Rs 28,298.46 crore. Out of the total loan of Rs 79,398 crore, Rs 63000 crore was interest-free and another Rs 16,398 crore was bearing interest.

In a statement to The Indian Express, the Ministry of Railways had said, “Indian Railways is performing well. Considering IR (Indian Railways) in the transformation phase of heavy infrastructural development, IR has been granted a moratorium of another two years for financial loan components. However, during the financial years, 2024-26 will pay the interest components of Rs 1,358 crore”.

The special loan was provided by the Centre to the Railways contingent to certain repayment conditions linked to its performance metrics. However, it is learnt that the Railways found it difficult to meet the terms and conditions related to certain performance metrics. Following this, the Railways sought a conversion of the loan to a grant in its pre-Budget consultations.