Railway cash surplus figures may get a boost

The RCC had then recommended that concessions in payment of dividend provided to the Railways for construction of new lines of strategic importance should also be extended to ongoing and future gauge conversion works taken up on strategic considerations. If approved, the move would ensure that the Railway Ministry gets relief worth Rs 3,858.85 crore in payment of dividend for the 2299.67 km of gauge conversion work projects, which were going on at the time the recommendations were made.

The concession will make the Railways’ “cash surplus before dividend” swell as it has been deducting the compensatory grant it receives on working of strategic lines from its working expenditure and not from the dividend amount it has to pay to the Government since the last fiscal.

This means, instead of deducting this compensatory grant from the dividend payable, the Railways is now paying the dividend in full and treating this grant as reduction in its working expenditure. Since the cash surplus being claimed is “before dividend”, paying the dividend in full does no damage to the ministry’s claims.

Meanwhile, alarmed at the concerns raised by the Japan International Cooperation Agency over the profitability of the Western Dedicated Freight Corridor considering its low Financial Internal Rate of Return (FIRR), the Railway Ministry has decided to fast track the Corridor, which would link Ludhiana and Sonnagar.