Railways may resist transfer of money to Central coffers

PSUS’ DIVIDEND

WITH A separate Rail Budget now a thing of the past, finance ministry has sought to appropriate the dividend Railways gets from its own PSUS, a move that was not part of the original Cabinet note on the Budget merger.

In a fresh letter to chairman Railway Board, AK Mital, Economic Affairs Secretary Shaktikanta Das has said that around Rs 1,050 crore may be remitted to the Central coffers on account of dividends the transporter gets from its PSUS. And that it needs to be remitted for FY17, a year when Railways is executing its own separate Budget.

The matter is being processed at the level of Mital’s office, which, sources said, is going to resist the move saying there is no case for such merger of its dividend into the Central coffers because PSUS were established with Railway money and that the dividends are part of the sundry receipts in railway books.

But the finance ministry appears to be of the view that with merger of the Budgets, even though Railways maintains operational autonomy, its finances stand subsumed in the overall government finances. In that case, the rail PSUS are also to be treated as any other Central Public Sector Enterprise — a contention that is being challenged within the railway bureaucracy.

The matter was first raised by the middle bureaucracy in the finance ministry in a Cabinet note on a different subject earlier this year. At that time Railways had furnished its comments dismissing the demand. But a letter from Das indicates that the finance ministry is not only ready to escalate issue but is readying for a sustained battle.

Railways has said that since it no longer presents a budget of its own, any shortfall in earnings over expenditure will automatically be taken care of by the government. The dividend it receives from its PSUS has a direct bearing on the transporter’s operating ratio as well as the financial health.

Some of the rail PSUS have been doing well in their respective fields and clocking healthy dividend figures. The Indian Railway Finance Corporation, the borrowing arm of Railways, for instance, declared Rs 340 crore dividend to the parent entity on Monday. Other profitable PSUS include IRCON, IRCTC, RVNL, RITES in a list of 14 such entities including special purpose vehicles.

If the dividend issue does not get resolved through correspondence and subsequent high-level meetings between the bureaucrats, sources said it will eventually be taken up by the political leadership and will be left to the two ministers.

In any case the government’s decision to put profitable rail PSUS up for listing in the stock markets has invited some amount of simmering discontent from within the PSUS but Railways has no option but to play ball because it’s part of the larger government policy now.