Indian Railways seeks safety net for its safety fund

After requesting the finance ministry to “handhold” it to meet a likely 45% surge in the Indian Railways’ staff bill in FY17 from the 7th Pay Commission, the railway ministry is now firming up a consolidated proposal for a Rs 1.1-lakh-crore non-lapsable National Railway Safety Fund (NRSF), with up to 60% of the resources expected to come from the exchequer.

The proposed fund — Rashtriya Rail Sanraksha Kosh — is in sync with the Zero Accident Mission that the transporter has embarked on, a senior official told FE. Apart from the funds expected from the finance ministry, innovative methods would be used to generate resources, the source said, adding, “We may introduce a safety cess for a particular period and may tap the private market too.”

Around 20-30% of the fund will be utilised for upgrading rolling stock and installing train collision avoidance systems, while the bulk of the fund will be utilised for constructing rail over bridges and under bridges, track renewals, elimination of manned and unmanned level crossings and repair of railway bridges.

As reported by FE earlier, the pay panel could inflate IR’s salary and pension expenditure by about Rs 40,000 crore in FY17. In a recent letter to finance minister Arun Jaitley, railway minister Suresh Prabhu sought an equivalent revenue grant to meet the pay commission expenses. Prabhu also cited the railways’ inability to fund the extra salary bill on its own, given the slow growth in freight revenue and the fact that a hike in rates could hit the economy.

“In order to maintain these expenses at the current proportion — at 51.5% of the gross receipts, the railway revenues will need to grow substantially by 40% in 2016-17 which is well nigh impossible given the fact that till October 2015 growth was only 8.4%,” the minister said.

This move by the railway ministry comes after the transporter witnessed 69 accidents on its network up to November 15 this fiscal. The previous railway safety fund was introduced in 2002-03 by then railway minister Nitish Kumar with a corpus of Rs 17,000 crore. It lapsed in 2008.

The transporter currently has 19,407 manned and 10,440 unmanned level crossings in the country. Data from the railway ministry website indicate that in the four years up to November 15, 2015, accidents at unmanned level crossings accounted for 38.9% of total accidents and 53.4% of total fatalities. For the current fiscal IR has earmarked elimination of 820 unmanned level crossings, closure of 205 manned level crossings and construction of 115 over bridges and 610 under bridges. “We have eliminated around 590 unmanned level crossings, closed 192 manned level crossings and constructed around 79 ROBs and 328 RUBs up to November,” a railway official said. The plan is to eliminate all unmanned crossings in one go instead of in phases.

The railway ministry’s demands for additional funds comes at a time when the Centre is experiencing fiscal stress.

The finance ministry has set a target to reduce the fiscal deficit to 3.9% of GDP this fiscal and 3.5% in FY17. While it says that this year’s target would be met, a case was made in the recent mid-year economic review for carefully reassessing the targets for the short term given the need to sustain the tempo in public spending to spur growth.