Railways will stop paying dividend to Finance Ministry

As the government decides to merge the Railway Budget and the General Budget, Union Cabinet on Wednesday scrapped the Railway Convention Committee (RCC) which determines the rate of dividend to be paid to the Finance Ministry, Railway Ministry sources said.

The Committee consisted of 18 members — 12 members from Lok Sabha and six members from Rajya Sabha. Both the Ministers of Railways and Finance are nominated members of the Committee. It was constituted in 1949 with the primary role of determining the rate of dividend, modalities of its payment and exemptions. It took on a wider role of examining various subjects related to working of the Railways and its finances since 1971.

The Union Cabinet decided on Wednesday that Railways will not pay dividend to the Finance Ministry for the capital invested in it beginning 2017-18. “Since dividend will no longer be paid, the RCC has been scrapped,” Railway Ministry officials said.

In 2016-17, the Railways is budgeted to pay Rs. 9,731 crore as dividend whereas the subsidy claimed by Railways towards loss-making routes is estimated at Rs. 4,301 crore. The net dividend payment to the Finance Ministry is estimated at Rs. 5,430 crore.

“The relief on this count will help us increase investments in track renewal, maintenance, station improvement and passenger amenities,” a top Railway Ministry official said.

However, pension will continue to be a liability of the Railways. In 2016-17, while the pension Bill is pegged at Rs. 45,500 crore, the wage Bill stands at Rs. 70,125 crore. The Railways will also bear the social commitment obligation by way of concessions or subsidised travel,” another official said.

Union Cabinet

scraps Railway Convention Committee that was constituted in 1949

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