Jaitley may deny Railways’ Social Obligation Costs Relief demand in Budget 2017-18

Railways has been requesting the finance ministry to relieve it of its social obligation costs amounting to around Rs.1,600 crore annually

New Delhi: Indian Railways’ demand to be relieved of its social obligation costs may come a cropper when Union finance minister Arun Jaitley presents the annual budget on 1 February.

The cash-strapped railways has been requesting the finance ministry to relieve the national carrier of its social obligation costs such as discounted fares for senior citizens, sportspersons, cancer patients among others amounting to around Rs.1,600 crore annually.

“We are asking for social obligation costs to not be ours…Whether they (finance ministry) can do it in this budget or not is another issue,” said a senior railway ministry official requesting anonymity.

This will be the first time that the railway budget and the Union budget will be presented together after 92 years. Another person, who also didn’t wish to be identified, confirmed railways’ persistent demand on the social obligation costs front.

Indian Railways planning a capital expenditure of around Rs.1.3 trillion for the financial year 2017-18, the highest-ever capital outlay and is expecting a gross budgetary support of around Rs.55,000 crore from the finance ministry. It has also firmed up a medium-term plan of investing Rs.8.5 trillion by 2019-20.

Queries emailed to spokespersons of the ministries of railway and finance on Friday remained unanswered.

Indian Railways, the world’s fourth largest railway system, depends heavily on freight revenue to subsidize passenger fares. It is facing an estimated 11% decline in freight revenue in 2016-17 financial year, from the previous fiscal, partly on account of India’s slower economic growth.

Railways which has been losing out its freight traffic to roads has a revenue target of Rs.1.84 trillion for the current financial year and expects the operating ratio—proportion of expenses to revenue— to be 92.