FinMin subsidised losses incurred on railway operations on strategic lines before merger. Post merger, the FinMin had discontinued the practice of providing annual subsidy to Railways for operating loss-making strategic routes as the IR was no longer required to pay an annual dividend.
NEW DELHI: The Railway Ministry has sought compensation for operating railway lines of strategic and national importance — a practice discontinued following the merger of Railway and Union Budget.
“We have sent a proposal for approval of the Union Cabinet to reimburse operational losses on national projects, projects of national importance, uneconomic branch lines, border area projects and all strategic lines,” said a senior Railway Ministry official, on condition of anonymity.
The Railway Ministry’s proposal has already faced opposition from the Finance Ministry, the official said.
Every year, the Indian Railways used to get subsidy from the Finance Ministry for losses incurred on railway operations on strategic lines. After the Budget merger, the Finance Ministry had discontinued the practice of providing annual subsidy to the Railways for operating loss-making strategic routes as the Railways was no longer required to pay an annual dividend.
Recently, two Parliamentary bodies — Standing Committee on Railways and Estimates Committee — recommended that the Finance Ministry should continue compensating the Railways for losses in operating strategic lines.
“Considering the role of Railways in nation building, reimbursement to Railways on their operating losses on strategic lines is justifiable,” the Standing Committee on Railways said in a report.
The subsidy provided to the Indian Railways by Finance Ministry for non-profitable routes stood at ₹4,024 crore and ₹3,723 crore in 2014-15 and 2015-16 respectively. However, in 2016-17, the Railways had budgeted subsidy of ₹4,301 crore on unviable routes which it didn’t receive from the Finance Ministry as its annual dividend was waived off.
“As these lines mainly cater to defence movements on border areas and development of social and backward region, the Committee recommends that reimbursement of operational losses on strategic lines and railway lines in hilly, coastal and backward areas should be continued and desires the Ministry of Railways to pursue the matter with Ministry of Finance in this regard,” the committee added.
The panel felt that compensation helped the Railways in providing relief towards “socially desirable projects” which are usually loss-making projects.
The Estimates Committee, chaired by BJP veteran Murli Manohar Joshi, in its report on Structural Changes in Union Budget had also said that the Railways should “continue to get reimbursement of losses on operation of strategic lines.”