FinMin reject Railway Ministry’s demand for waiving Dividend for 2016-17

New Delhi:  The Finance Ministry has rejected the Railway Ministry’s demand for waiving dividend for 2016-17 or deferring its payment, a senior railway official said.

The Railways had made the demand citing its poor finances reported in the mid-year review meeting in November.

“The Finance Ministry didn’t agree to our demand of not paying dividend due to weak financial position this fiscal year,” a senior official said on the condition of anonymity.

After the Railway Budget merges with the Union Budget from 2017-18, the Railways will not be required to pay dividend for the capital invested in it. In 2016-17, the Railways was budgeted to pay Rs. 9,731 crore as dividend, whereas the subsidy claimed by it towards loss-making routes was estimated at Rs. 4,301 crore. The net dividend payment was estimated at Rs. 5,430 crore.

Shortfall in Earnings

Till October this financial year, the Railways had registered a Rs. 14,284 crore shortfall in earnings from the budgeted earnings of Rs. 1,03,900 crore. While passenger earnings fell 10 per cent short of the projections, freight earnings dropped 13 per cent.

The operating ratio, an indicator of the Railways’ finances, has touched 113.71 per cent, a far cry from its target of 92 per cent. This means, the Railways is spending around Rs. 114 to earn Rs. 100.

The Railway Convention Committee, which determines the rate of dividend to be paid, also recommended waiving the dividend for 2016-17 as a one-time move.

The Parliamentary Committee noted the precarious state of railway finances especially owing to the impact of the recommendations of the Seventh Central Pay Commission which had severely dented the internal resources generation of the national transporter.