Railways escapes glare of slippages in interim Budget 2019; capex falls short while total spend overshoots estimates
It is more than a decade since the Railways embarked on accounting reforms. The official website says the opening and closing balance sheets of all the divisions will be done in the new format by April this year. That seems unlikely.
Total expenditure overshot the Budget estimates by Rs 3,100 crore while receipts fell short of them by Rs 3,876 crore
The dedicated freight corridors are supposed to be operational later this year. Goyal did not speak of their progress.
Next year’s Budget support share in capital expenditure has been set at 41 percent. The rest will come mainly from borrowings.
Only two of 98 paragraphs of Finance Minister Piyush Goyal’s Budget speech were devoted to the Railways—and they were (naturally) feel-good ones. This has proved the fear of observers that doing away with the practice of separate Budget presentation (beginning 2017) to put an end to railway ministers using the occasion for grandstanding would have an unintended consequence: There would be none of the public scrutiny the Railways were subjected to.
In his Budget speech, Goyal said the operating ratio or the share of expenses (including appropriations for pensions and for replacement of worn-out assets like tracks) in total receipts was 96.2 percent. What he did not say was it overshot the target of 92.8 percent. Since the Railways maintain their accounts on cash, and not accrual basis, even this ratio might be an overstatement and may have been achieved by postponing payments to the next year. When this government took over, the operating ratio was 94 percent, which was itself a terrible figure.
Total expenditure overshot the Budget estimates by Rs 3,100 crore while receipts fell short of them by Rs 3,876 crore. Staff cost including pensions this year was 66 percent of total expenditure. The increase in staff cost of Rs 7,153 crore over last year ate up 55 percent of the incremental revenue. Next year’s staff cost, including pensions, is expected to rise by nearly Rs 12,000 crore and will shave off 72 percent of the anticipated increase in revenue. The Railways had about 13 lakh workers each drawing an average of Rs 73,625 a month. Last year, about one lakh workers were added in the lowest grades. This will have a ripple effect on cost in the coming years.
The Railways hauled 1,266 million tonnes of goods, which was 56 million tonnes more than last year. The incremental haulage came mainly from coal and to a lesser extent from cement. The Railways expect to do 50 million tonnes more next year. Though the total distance travelled by goods carried was 2,213 million kilometres less than last year, the Railways earned Rs 12,695 crore more from them by raising the haulage rates.
Fewer non-suburban passengers travelled on the Railways. The number of the poorest of them—those travelling second class—fell from a year ago by 62 million. They contributed Rs 491 crore less to the Railways' kitty. This is perhaps an indication of fewer job opportunities—and hence of lower migration. The numbers were also down in the comfort classes. Those travelling AC sleeper were 1.38 million less than last year but they paid Rs 439 crore more than last year – perhaps because of dynamic pricing. There are reports that another tariff hike is being planned. The Railways claim passengers are being subsidised though how costs are being allocated is not clear.
Suburban passengers made up for the shortfall and overall the Railways carried 68 million more passengers than last year and earned Rs 3,357 crore more. In the previous budgets, the Railway would lay a statement of the physical targets achieved with regard to gauge conversion, electrification, doubling of tracks and new lines. This information is not available on the website (or in the general budget).
In terms of expenditure, Rs 346 crore less than the budget estimate for this year was spent on conversion of narrow and meter gauge tracks to broad gauge. On new lines, Rs 1,748 crore less than the previous year was spent. On track doubling, the amount spent was Rs 60 crore less than budgeted and Rs 700 less than the amount spent last year. But there have been robust increases in expenditure on rolling stock which at Rs 3,725 crore was more than double the amount spent last year. The next year, this is expected to further rise by 65 percent to Rs 6,115 crore. Investment in locomotives or Railway engines was more than double and on carriages there was a four-fold rise over last year.
The minister said the capital outlay for the next year was the 'highest-ever' at Rs 1,58,658 crore. It is for the next Railway minister in a new government to make good on that promise. This year, the capital expenditure fell short of the target by Rs 7,646 crore, but was 26 percent higher than last year at Rs 138,387 crore. Of this, 38 percent came from the general Budget, down from 43 percent last year. Next year’s Budget support share in capital expenditure has been set at 41 percent. The rest will come mainly from borrowings.
The dedicated freight corridors are supposed to be operational later this year. Goyal did not speak of their progress. We do not know the achievements in station re-development, the conversion to bio-toilets, and of accounting reforms. It is more than a decade since the Railways embarked on accounting reforms. The official website says the opening and closing balance sheets of all the divisions will be done in the new format by April this year. That seems unlikely.
(The author is a senior journalist. He tweets @smartindianagri)
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