Tuesday, December 6, 2011

Railways admits to overspending

Our Bureau    New Delhi, Nov. 28: 
The Indian Railways, once a cash cow for the Government, is now officially in deficit. The Railways have for the first time admitted that they overspent in 2010-11, as a result of which the fund balances have become negative in 2010-11.

“As per the final accounts of 2010-11, the excess left after payment of dividend was inadequate to cover the expenditure incurred out of Development Fund and Capital Fund,” the Railways stated in reply to a Parliament question.
The Railways further go on to add, “As a result, closing balances under these two funds have become negative, and the Ministry of Finance was requested to extend a temporary loan of Rs 2,101 crore to bridge the gap.”
To fill this gap, Railways is trying to get a bridge loan from the Finance Ministry, which has been turned down. The Finance Ministry has asked Railways to meet this liability of raising resources in current fiscal.


The hole in finances could get bigger this year, unless the Railway earnings go up significantly or there are huge reductions in costs.
The earnings front does not look rosy with the earnings for the seven month period of April-October turning out to be lower than the budgeted amount. Till October, Railways had earned Rs 57338.09 crore, which is 2.6 per cent lower than the budget target for the period.
On the expenditure side, a large share is accounted for by some heads such as salaries and fuel bill, which are extremely difficult to control.
For instance, salary and staff expenses and pension fund account for close to 60 per cent of Railways working expenses (according to actual data of 2009-10). Another 16 per cent of the working expense is spent on fuel – something unlikely to go down in the backdrop of rising diesel prices.


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