New Delhi: Facing a fund crunch, Railways will soon issue tax-free bonds to raise around Rs 10,000 crore.
"We have received the notification (clearance) from the Finance Ministry. Based on the notification, we are going ahead for public issue which should materialise by the end of November or beginning of December," Financial Commissioner Pompa Babbar said.
The Finance Ministry has given notification to four organisations, including PFC and Railways, for raising tax- free bonds.
The market borrowings of railways is pegged at Rs 20,594 crore in the current fiscal, out of which Rs 10,000 crore is expected to be raised through tax-free bonds by Indian Railway Finance Corporation for financing select capacity enhancement work.
Babbar, however, said the amount to be raised through tax-free bonds depends upon market conditions.
"A lot depends on the market appetite...the financial condition of the market. There are lots of ups and downs in the market. But we hope for the best", Babbar said.
Railways has also got temporary relief on account of service tax on freight services.
"The service tax on freight has been kept at abeyance till December 31 and we have got the letter from the Finance Ministry to this effect. But the tax relief on the auxiliary services is yet to come and we are fighting for it", the official said.
While the freight taxes are pegged at Rs 1940 crore, the auxiliary service taxes are about Rs 250 crore.
Faced with the fund crunch and seeking fiscal discipline, Railways has taken away re appropriation power from General Managers (GM) of zonal railways.
"We are trying to enforce fiscal discipline and trying to see that money is spent in the best possible manner. Earlier, we had given re-appropriation power at the zonal levels to meet the salary and other local requirement.”
"However, we found that money is being used in some other non-priority areas and we have to give extra fund for meeting salary requirement. So, we had to withdraw the re appropriation power from our GMs", Babbar said, adding "this has been done for greater fiscal discipline".
Asked about other measures to improve railway finances, she said, "We have requested the Convention Committee to reduce our dividend liability and they have agreed to give us relief of one percent in our dividend liability.”
"So, from six percent, this year there will be some reduction in dividend liability. We will be paying five percent on dividend and it would not be more than Rs 600 crore relief in dividend liability", she said.
On the impact of Sixth Pay Commission recommendations, she said the impact will be less from next year.
"There is always a certain increase in salary after Pay Commission and it continues for a year or two. Gradually, from next year onward, we will be reaching a plateau and there will be less problem like the current situation", according to Babbar.
Asked whether railways is going bankrupt as a doomsday scenario is being projected by various quarters about railways dwindling financial health, the Railway Finance Commissioner said, "Every month we are earning. Our monthly earnings are about Rs 8000 crore to Rs 9000 crore on an average but we would like to earn more.”
"Our salary and day-to-day work has not been affected. What has been affected is our work front. Our expansion work, infrastructure projects are affected. There we may be going a
bit slow. But it is a short-term phenomenon. Gradually, we will come out of the situation."
Railways have found certain discrepancies in the payment to its pensioners.
"It has been found that pension for other ministries are being given to railways and railways are booking that payment. We have detected such a case in the East Coast Railway. This
is a mistake on the part of bankers," she said.
"In other ministries, Pay Commission recommendations are paid by the Finance Ministry but in railways we have to make our own payment. Railway is the only ministry where we not only pay the Pay Commission arrears but we also take care of our pensioners," Babbar said.