New Delhi: If railway minister Mamata Banerjee had picked another version of the speech she delivered in Parliament on Friday, the nation would have known that the railways are in a bigger fiscal hole than the government has let on and Kolkata may have been in line for a larger bonanza.
Although she didn’t choose to read this version of her railway budget speech, it did manage to find its way to the website of the Press Information Bureau before it was taken out and replaced with the version Banerjee delivered.
Interestingly, the alternative version is critical of former railway minister Lalu Prasad’s policy of banking on reserves to fund capacity expansion. Prasad had taken credit for turning around the railways during his five-year tenure.
The alternative version going up on the website could simply have been a secretarial mistake. Mint couldn’t immediately ascertain why the minister chose to read from the version she did.
The version that wasn’t used reveals Banerjee was proposing to actively lobby her cabinet colleagues to facilitate an extension of the dedicated freight corridor project, which was to terminate in Sonenagar in Bihar, to Kolkata port.
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In the version that was dropped, Banerjee indicates that the fiscal mess in the railways was deteriorating rapidly, forcing it to dip into its cash chest more deeply than it should have. “To fund our massive network expansion programme, completion of capacity enhancement works and timely replacement of overaged assets, the Plan Expenditure has been sustained in the two years of 2008-09 and 2009-10 through draw-down from our accumulated Fund Balances, which may not be possible in the future,” according to the version.
In other words, appropriations to railway funds have been growing at a slower rate than withdrawals.
The railways maintains five major funds—the depreciation reserve fund, the railway development fund, the railway pension fund, the capital fund and the railway safety fund—all of which are in cash and deposited with the Reserve Bank of India. The speech goes on to add, “This draw-down has left the available fund balances at Rs8,361 crore in 2009-10 from Rs22,279 crore in 2007-08.”
A review of the explanatory memorandum of the railway budget supports this. It reveals that the numbers were much worse than what Prasad had posited while presenting the interim budget in February. And this was surprising, given that actual appropriations in 2008-09 were substantially lower than estimated. While in the budget estimate for 2008-09, Prasad had projected Rs29,363 crore, the actual inflow was Rs24,832 crore. Withdrawals were underestimated by Rs1,258 crore, resulting in a drop in the closing balance by one-fifth.
Two officials of the Railway Board, the apex governing body, whom Mint spoke with over the weekend, confirmed that discussions about the state of finances were taken up, but said there was no cause as yet for panic. The officials didn’t want to be named.
“The overall cash-in-hand situation is still stable despite the slowdown, and that is more important than whether the deposits have increased into these funds. That is only a matter of detail. The more important thing to look at is whether the railways has enough cash to invest and that we do,” said one of them.
The railways has been affected by dwindling freight loading, down 17 million tonnes from earlier projections for 2008-09, as a fallout of the downturn. This has coincided with a Rs13,600 crore outgo because of salary increases ordered by the pay commission.
Former railway officials say appropriations may go down, normal service will be resumed once freight growth or demand for certain bulk commodities increases. The growth over the first three years under Prasad was driven largely by iron-ore traffic.
The political opposition, particularly the Bharatiya Janata Party (BJP), was quick to join issue.
“The (railway minister) under the garb of coming out with a White Paper has hidden the facts and the true state in which railway finances are,” said senior BJP leader and former finance minister Yashwant Sinha. “Especially the draw-downs made from various reserve funds will have a long-term impact on the railway, and any further deterioration will make the Indian Railways unsustainable.”
His BJP colleague Arun Jaitley, leader of the Opposition in the Rajya Sabha, who is expected to initiate debate on the railway budget on Tuesday, said, “This is a complete cover-up. The railway’s accounts over the last few years do not reflect the true picture.”
Manish Tewari, Congress spokesperson and Lok Sabha MP, said, “If at all certain things were left unstated as you people are making it out to be, then the best person to speak about it would be the railway minister. And we do hope that since she talked about transparency, if at all there are certain issues relating to internal accruals which generate the reserve funds, it would find mention in the White Paper that the railway minister has promised in her budget.”
Banerjee couldn’t be reached for comment on Sunday. Partho Chatterjee, a senior leader and spokesperson of Banerjee’s Trinamool Congress, said the White Paper would be published soon.
“Mamata wants to begin with a clean slate and so, she wants to lay bare what her predecessor did in the last five years,” he said. “Her White Paper will cover everything from success to failure of the department.”
Santosh K. Joy, Ruhi Tewari and Romita Datta contributed to this story.