BackRailways unprepared for listing of units: Financial commissioner Shahzad Shah
Indian Railways financial commissioner Shahzad Shah explains how Union Budget 2017 will impact the national transporter
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New Delhi: Indian Railways was allocated Rs1.31 trillion from the Union budget 2017-18 along with two surprises—stock market listing of Indian Railways-owned companies and withdrawal of service charge on e-ticketing. In an interview, railway financial commissioner Shahzad Shah explains how the budget will impact railways. Edited excerpts:
How do you see financial allocation? Is it what was expected?
It was the first budget after railways budget merger with the Union budget and we are happy with the provision of funds. We have got a gross budgetary support (GBS) of Rs55,000 crore, which includes Rs15,000 crore for Railways Safety Fund. The GBS takes care of around 40% of our total capital expenditure requirement. Besides, the dividends have also been waived off.
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Did you consider rail safety fund of Rs1 trillion as part of GBS requests? How will you contribute your share of Rs5,000 crore?
If you consider this way, then we still have got ₹ ,000 crore more from GBS. Last year, our revised budget estimate was ₹ 5,000 crore and this year it would be ₹ 40,000 crore after deducting rail safety fund. We had projected ₹ 0,000 crore as GBS considering the safety fund. Our share of ₹ ,000 crore for the fund has to be generated from our internal resources, which includes increase in revenue and savings.
What was the biggest surprise for the Railways in the budget?
Listing of railway PSEs (public sector enterprises) in stock exchange was the biggest surprise for us. Till date, Concor (Container Corp. of India ) was the only railways PSU which was listed in the stock market. We have not worked out how much disinvestment will take place as each PSU may have different take; some may go (for) 10% (stake sale) and some may go for more. Railways are still unprepared for PSE’s listing on stock exchange.
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However, we understand the government’s purpose of disinvesting. Since the decision has been taken now, the exercise will take another 2-3 months to finalize how to go ahead. T
hough the finance minister in his budget speech has listed just three—RITES, IRCON and IRFC, we have got to know that the plan is for other PSUs too as the Union minister has referred to etc.
What were the other request from railways apart from funds?
We had been expecting and had written to them also to take care of some subsidies like senior citizen, handicap, defence personnel, etc. A proposal was also sent but it hasn’t been agreed to. So, that is the only portion which finance ministry hasn’t agreed on. One of the reasons the finance ministry has mentioned is that they didn’t ask the Indian Railways to give subsidies. This was a point they have made.
So who will take a call on removal of subsidies in railways?
From this year, it will be a call of the finance ministry. We have the autonomy, but for fare increase or decrease, we have to go to them. We had planned that subsidy should be Aadhaar-linked but it wasn’t accepted. The subsidy portion of railways is around Rs37,000 crore, which includes subsidy on passenger fares to ensure that people travel on cheaper rates and concessional subsidy of Rs16,000 crore for senior citizens, handicapped, etc.
A major setback has come in the form of removal of service charge on e-ticketing which is around Rs500 crore for IRCTC. How will it manage?
Indian Railways Catering and Tourism Corp. (IRCTC) is a PSU and needs to have a revenue model. It’s true that they would get a big setback, but we’ll see what could be worked out. They need to have some other route for revenue earning now.
Do you think the railways will be able to roll out accrual-based financial statements by March 2019 as declared by finance minister?
We are on way to accounting reforms and a major initiative has already taken off. Pilots have been done in North West Railways, one division and one workshop and now, we have to roll out it to pan-India and this rolling out will take time.
The push is coming from government to make it happen by 2018 itself, but it will certainly go uptill 2019. The main need for the change in accounting system is so that Indian Railways can have their balance sheet for overseas investments.
The target for station re-development has been kept 25 for this year. Will you have funds for it?
Railways has been going for a model where our investments are minimal. Even if you take example of Gandhinagar station re-development programme, our share is just Rs50-70 core. So, finance for station re-development is not an issue.
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