Gross Budgetary Support of Railways slashed

Gross Budgetary Support (GBS) of Rs 40,000 crore was announced in the 2015-16 Rail Budget. However, the Finance Ministry slashed it to Rs 28,000 crore, a decrease of Rs 12,000 crore in November last year citing low spending by Railways in the first six months of the current fiscal. 

Finance Ministry has slashed the gross budgetary support of railways, which is already facing a shortfall in meeting earning target, to Rs 32,000 crore from the Rs 40,000 crore announced in the last rail budget.

Gross Budgetary Support (GBS) of Rs 40,000 crore was announced in the 2015-16 Rail Budget. However, the Finance Ministry slashed it to Rs 28,000 crore, a decrease of Rs 12,000 crore in November last year citing low spending by Railways in the first six months of the current fiscal. Disagreeing with the expenditure observation, Railways wrote to the Finance Ministry saying the first two quarters always remain low on spending as the period involves planning, sanction and also monsoon season which also slows down work.

 "The last two quarters of the fiscal are significant for job execution in railways," a senior railway ministry official said, adding, "We wrote back to the Finance Ministry seeking reconsideration of their decision to reduce GBS." Finance Ministry, however, agreed to reduce Rs 8000 crore instead of Rs 12,000 crore, thus giving a relief of Rs 4000 cr. 

Till October, the railways was around 10 percent short of its internal target for passenger and freight revenue as earnings were lower by Rs 9,086 crore. 

The operating ratio (OR) target of 88.5 percent for 2015-16 also touched 97 percent, making it clear that Railway Minister Suresh Prabhu will have to do a lot of balancing act to keep the OR in control. On top of that, railways need Rs 32,000 crore more on account of the Seventh Pay Commission recommendations. 

Though Prabhu had written to Finance Minister Arun Jaitley seeking the exchequer's generous help to bear the burden of the commission recommendations, the request was turned down and railways was told to raise resources on its own.