Parliamentary Railway Convention Committee directed Indian Railways to observe Fiscal Discipline

A parliamentary railway convention committee directed the Indian railways to observe greater fiscal discipline by focusing on reducing working expenses and escalating project costs.  The panel asked railways to allocate more sums on safety fund, which could be used on conversion of unmanned crossings, replacement of old assets and construction of over and under bridges.

The committee observed that the railways needed Rs 1.30 lakh crore to complete its huge projects’ backlog.

Supporting railways’ demand for higher gross budgetary support for funding pending and ongoing projects, the committee directed the state-run transporter to emphasize on prioritization of projects while spending their scarce resources.

The panel suggested reducing rate of dividend paid by railways to general revenue from existing 6% to 5% for fiscal 2011-12 purely as an interim measure.

The committee pointed out that the elasticity of transport to GDP is 1.25% and a 9% growth in GDP would translate into a demand for transport to the tune of 11%. The committee also noted upward trend in state-run transporter’s financial position in 2010-11 as freight loading increased to Rs 1.03 lakh crore, 18.4% higher than 2010, passenger earning rose to Rs 25792 crore, or 9.8% more and total receipt have increased to Rs 96681 crore, or 8.4%.

However the committee found that total working expense hike to Rs 89473 crore was 7.9% higher than in 2010.

The committee noted that budgetary provisions made for railways safety fund declined from Rs 1071.36 crore during 2009-10 to Rs 935 crore for 2010-11 (RE) as against Rs 1,043 crore budgeted for the fiscal.