The Finance Ministry has agreed to partially fund the creation of a dedicated railway safety fund in the upcoming Union Budget to be presented on February 1.
At a time when train derailments have increased to a six-year high of 74 till January 23 this year compared to 65 in 2015-16, this may prompt the Railways to bring back a cess on railway tickets to fund safety efforts.
The dedicated rail safety fund is proposed to be utilised for track improvement, bridge rehabilitation works, rolling stock replacement, human resource development, improved inspection system, safety work at level crossings, among other things.
The Railway Ministry had requested the Finance Ministry to create a non-lapsable safety fund named ‘Rashtriya Rail Sanraksha Kosh’ over five years. However, the finance ministry is likely to grant a fresh infusion of only ₹5,000 crore in the upcoming financial year out of the initial proposed corpus of ₹ 20,000 crore.
Central Road Fund
About ₹10,000 crore will likely be earmarked from the Central Road Fund (CRF) that is collected by levying a cess on diesel and petrol at present for safety-related works. The Railway Ministry, that was expecting an annual budgetary support of ₹20,000 crore over five years from the Finance Ministry for the proposed ₹1,19,183 crore safety fund, may now be asked to fund the remaining ₹5,000 crore for the initial corpus from its own resources.
Now, it may either have to bring back a cess on rail tickets to finance its share of Rail Safety Fund or look to fund it from non-budgetary resources.
“We were not seeking this fund immediately. We were saying, over a period of time, over a five-year period. On average around ₹20,000 crore per year we were looking for as a support or as a grant from the Ministry of Finance to take care of this assets which were stressed so that we are able to improve the safety scenario in Indian Railways,” Railway Board Chairman A.K. Mittal had told the Parliamentary Standing Committee on Railways in December 2016.
Budgetary support
“The proposal to set up the Rashtriya Rail Sanraksha Kosh fund has been agreed to, but we are told that ₹5,000 crore will come as budgetary support from the Finance Ministry and ₹10,000 crore will flow into the fund from the CRF that we already receive every year,” a senior Railway Ministry official said on conditions of anonymity.
In 2001, when a Special Railway Safety Fund of ₹17,000 crore was created, the Railways raised ₹5,000 crore through safety surcharge on passenger fare and the remaining ₹12,000 crore came from the Finance Ministry.
Back then, the Railways levied a fee of ₹1 for second class ordinary trains and ₹2 for second class Mail or Express trains per person. For other classes, the surcharge on tickets had ranged between ₹10 and ₹100 depending on the class and distance of journey.
The Railways had asked for setting up ‘Rashtriya Rail Sanraksha Kosh’ based on the recommendations of a high-level safety review committee under former chairman Atomic Energy Commission Dr. Anil Kakodkar.
Implementation hurdle
The Committee, which submitted its report in 2012, had projected an investment requirement of ₹1 lakh crore on safety over five years. The Centre has so far fully implemented 22 out of 87 partially or fully accepted recommendations made by the panel.
“Bulk of the recommendations involved either the introduction of some technology that was under trial or improvement of the asset quality which required money. That is why we have not been able to fully implement the recommendations,” Mr. Mittal had told the Parliamentary Committee.
He also told the committee that since both the Union and Railway Budgets will be merged for the first time, Finance Ministry “will be more amenable” to the Indian Railways’ request to fund a substantial portion of the railway safety fund.
