New Delhi (NVI): With the Indian Railways steadily losing traffic to other modes of transport, the Parliament will discuss the Rail Ministry’s demand for grants so that the finances of the national carrier are not affected.
The Parliament reconvened today after recess for the second part of the Budget Session. The Demand for Grants for the Ministry of Railways is set to be discussed and voted this week.
The growth rate of both freight traffic and passengers has declined for Railways as it is losing traffic to road transport because of inadequate and poor service. As a result, most of India’s passengers and the bulk of freight go by road.
According to a recent estimate by the railways, currently 90 percent of India’s passengers traffic and 65 per cent of its freight uses road transportation.
The freight basket is also limited to a few bulk commodities such as coal, cement and iron ore. Any shift in transport patterns of any of these bulk commodities could affect the Railways’ finances significantly.
In addition, profits from freight operations are used to offset losses from passenger services. In 2017-18, 95% of the profit earned from freight operations was utilised to compensate for losses from passenger and other services.
High operating ratio (>90%) reduces the Railways’ ability to generate surplus for capital investments. As a result, the Indian Railways will fund only about 5% of this capital expenditure from its own internal resources in 2020-21. 52% will be financed through extra budgetary resources and the rest from the Centre.
The Railways finances were presented on February 1, 2020 by the Finance Minister Nirmala Sitharaman along with the Union Budget 2020-21. The Ministry of Railways manages the administration of Indian Railways and policy formation through the Railway Board. Indian Railways is a commercial undertaking of the government.
Railways’ revenue for 2020-21 is estimated at Rs 2,25,913 crore which is a 10% increase from the revised estimates of 2019-20.
