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Finance Ministry rejects Railways request for Rs 32,000 crore

PTI 12 Jan 2016, 22:02:49 IST

New Delhi: Finance Ministry has rejected the request of Railways for Rs 32,000 crore as revenue grant, sought to tide over the impending impact of the 7th Pay Commission recommendations on the public transporter.

In a communication to the Railways, Finance Ministry has categorically rejected the Rs 32,000 cr demand expressing its inability to provide the grant, and has asked the public transporter to raise its own resources to manage the finance, said a senior Railway Ministry official close to the development on the matter.

Earlier Railway Minister Suresh Prabhu had written a letter to Finance Minister Arun Jaitley seeking Rs 32,000 crore as grant from the exchequer's for implementation of the Commission recommendations and has cited the difficult financial position that the railways is passing through.

Read Also: Prabhu seeks Rs 32K cr from FinMin to bear Pay Commission burden

"I would therefore earnestly request you to help the Ministry of Railways and handhold it for the implementation of 7th CPC recommendations," the Railway Minister said in the letter last month. Prabhu hoped that during the coming 3-4 years period, railways would be able to absorb the impact from their resources through gradual adjustment of fares and other non-tariff revenue measures.

However, after the rejection of the demand, there would be a fresh attempt by Railway Ministry to take up the issue with the Finance Ministry.

According to the 7th Pay Commission report, the annual financial impact on Railways will be approximately Rs 28,450 cr in addition to the normal growth which will require to be built into the Railway Budget 2016-17.

The initial assessment, however, is that this additional impact would be around Rs 30,031 cr over and above the normal assessed growth of Rs 10,816 crore.

Prabhu has repeatedly maintained that the Pay Commission burden is "unbearable" and the railways cannot implement it without government help. Currently, the Railways is facing a financial crunch with earnings from freight and passenger earnings below the target.

Currently, pay and allowances and pension account for 51.5% of the gross receipts of railways. With the financial impact of the 7th CPC, this will increase to 68% of the gross receipts in 2016-17 at present level of growth.