Broke railways orders babus to cut spending

NEW DELHI: Railway Board chairman Vivek Sahai has directed strict curbs on spending as the railways faces a deficit of at least Rs 2,200 crore. The board wants to reduce expenditure on replacing worn out assets through the Depreciation Reserve Fund and creating new ones from the Development Fund.

Sources said payments to contractors have been stopped in most zones except the eastern zone, part of which falls in railway minister Mamata Banerjee’s home state of West Bengal. This has resulted in many large projects being stalled in every zone, an official said. The precarious fiscal position has prompted Sahai to control spending.

Going off track

Railways faces a deficit of at least Rs 2,200 crore as expenses on official tours, overtime and night duty allowances have shot up Earnings scenario grim. Freight loading has dropped by 10 mn tonnes from April to October 2010 Railway Board chairman Vivek Sahai has ordered strict cost-cutting Payments to contractors stopped in most zones except eastern zone, part of which falls in rly minister Mamata Banerjee’s home state, West Bengal. Staff told to travel only for essential work Rlys pleads for higher plan support of Rs 39,600 crore

E xpenses for official tours, overtime and night duty allowances have shot up. “Now, railway staff have been asked to travel only for essential work. I find that there are huge expenses, and thus, a disturbing trend in the payment of travel, overtime and night-duty allowances,” Sahai said in his letter to the general managers of zonal railways.

A review by the Railway Board chairman revealed that the railways’ revenues were short of its target by Rs 1,192 crore during the April to October period. At the same time, it had exceeded its ordinary working expenses by nearly Rs 2,400 crore. The combined net revenue shortfall was about Rs 3,600 crore. Including the budget grant, the shortfall could be about Rs 2,213 crore.

“The fiscal position is really alarming. If things continue in the same manner, it is going to be worse at the end of financial year as the results are only till October ,” an official said, adding that the railways was pleading for a higher plan support of Rs 39,600 crore and for the finance ministry’s intervention to absorb the burden imposed by the Sixth Pay Commission.

Sahai’s letter comes in a year when the railways has not budgeted for a steep rise in development and depreciation fund-related spending. In the previous Budget, Banerjee had proposed to appropriate around Rs 2,800 crore into the Development Fund, while withdrawals were estimated around Rs 2,700 crore, resulting in a net accretion of around Rs 100 crore.

In case of the Depreciation Reserve Fund, the appropriation was to be Rs 7,700 crore, while withdrawals estimated around Rs 7,600, translating into a net injection of Rs 100 crore.