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PM clears Rs 17,000-cr Railway safety fund

Our Bureau

NEW DELHI, July 2

AFTER protracted negotiations with the Finance Ministry for a safety grant, the Railway Ministry on Monday managed to get an in-principle approval from the Prime Minister, Mr Atal Bihari Vajpayee, to set up a Rs 17,000-crore non-lapsable safety fund to r eplace over-aged assets.

The total corpus of the fund will be built over a period of five years, with contributions coming in from the Indian Railways, the Central Government in the form of budgetary support and from other sources including funds from multilateral funding agenci es. The financing pattern will be worked out over the next two weeks by officials from the Finance Ministry, Railways and the Planning Commission.

For the current year, Rs 2,500 crore would be provided from this fund for safety related investments. The sum would be in addition to the annual budgetary allocations made for such projects in this year's Rail budget.

Given the precarious state of Railway finances, the Railways may be compelled to consider the levy of a cess on passenger fares. The Railway Minister, Mr Nitish Kumar, however, maintained that there was no proposal, as on date, to enhance passenger tarif f.

The decision to create a safety fund was taken at a high-level meeting chaired by the Prime Minister on safety concerns and financial issues of the Indian Railways. Besides the Railway Minister, the Finance Minister, Mr Yashwant Sinha, and the Chairman o f the Planning Commission, Mr K C Pant, and senior officials from the Railway Board, Finance Ministry and Planning Commission participated in the deliberations.

A presentation on the dismal state of Railway finances was made by the Chairman of the Railway Board, Mr Ashok Kumar. The Railways made a case for extra assistance of Rs 17,000 crore to clear arrears for safety requirement, citing constraints on internal resource generation in view of mounting salary costs and pensionary liabilities, increasing lease rental charges and heavy cross subsidy of passenger fares by freight rates.

The amount is Rs 2,000 crore higher than the Khanna Committee's assessment of fund requirement of Rs 15,000 crore on safety related projects. The Ministry also sought an enhancement in its share of the diesel cess, a bulk of which is earmarked for the Ce ntral Road Fund.

Briefing reporters here, Mr Nitish Kumar said that a decision was also taken at Monday's meeting to accelerate projects which are nearing completion. The official team, which would work out the funding arrangements for the safety grant, will also identif y projects requiring additional resources to avoid time overruns.

Officials said that the Railway and Finance Ministries have resolved differences over the issue of servicing the World Bank loan for the Rs 5,618-crore MUTP project being implemented by the Mumbai Railway Vikas Corporation (MRVC). The Railways has agreed to commit proceeds of the surcharge, to be levied on commuters, to the Finance Ministry for servicing the debt.