The railways have been on the fast track but it may be in for trying times. India’s largest employer will have to bear the brunt of the 6th pay commission even as the finance ministry scales down its budgetary support. CNBC TV 18 reports Railway Minister Lalu Yadav will have to walk a tight rope ahead of the elections.
The Finance Ministry has asked the Rail Ministry to set aside Rs 9000 crore to provide for a possible impact of the 6th Pay Committee recommendations. The railway is the second largest employer in the world with a whopping 14 lakh employees, topped only by the Chinese army.
The Railways which is scheduled to present the Rail Budget on the 26th of February had asked for a budgetary support of more than Rs 13000 crore for the next fiscal but at a time when the government has other social sector priorities like health and education, sources say the finance ministry has allocated just Rs 7100 crore for the Railways.
This may hamper the Railways' massive expansion plans and so we believe the Finance Ministry has asked the Railways to go for more market borrowings.
The Finance Ministry say the Railways are a profitable enterprise which is under leveraged and raising debt from the market is a better option than relying on budgetary support.
Last year, the railways turned in a cash surplus of Rs 20,000 crore before dividend. Sources say that though the Railways will still have sufficient internal surplus passenger fares may be left untouched. Last budget fares were left unchanged.
More so the recent spate of airline consolidations has raised average airfares. Freight rationalisation though will continue. But this being an election year, Lalu Prasad Yadav may still be tempted to let politics of the aam aadmi rule over economics.
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