The Indian Railways has achieved highest ever capital expenditure at around Rs 1.32 lakh crore in 2018-19, a jump of Rs 30,000 crore from Rs 1.02 lakh crore achieved a year ago.
The actual capex for 2018-19 will, however, be less than the revised target of Rs 1.38 lakh crore and the Budget estimate of Rs 1.46 lakh crore. The increase in capex will be a breather for the transporter which witnessed a fall from Rs 1.09 lakh crore in FY17 to Rs 1.02 lakh crore in FY18.
According to two railway sources, extra budgetary resources (EBR) from partnerships has been the drag in FY19 as targets under all other heads have been almost achieved. “Third-party investments in private freight terminals, wagons and state government projects did not come in. May be the targets were ambitious,” said a railway official. The target for funding under partnerships was Rs 27,000 crore.
Investments in rolling stock, which is part of EBR through IRFC, is expected to be around Rs 24,000 crore against a target of Rs 27,852 crore for FY19. The gross budgetary support (GBS) has been retained at the revised estimate of Rs 53,060 crore. However, Rs 5,000 crore from GBS for identified ten ‘nationally important’ projects have been moved to EBR and the freed amount has been deployed towards other projects.
As reported by FE, after negotiations that went on for almost a year, the ministry of finance has agreed to service debt—both principal and interest—which the Indian Railways will take under EBR to fund ‘nationally important’ projects. The total cost of the 10 projects that will be financed through this arrangement is rs 50,000 crore over a period of five years.
The institutional finance portion is also expected at around Rs 23,000 crore compared with the revised estimate of Rs 24,768 crore for FY19. This has been achieved by extra borrowings made through IRFC as despite clearance for around Rs 1,600 crore for FY19, LIC did not pay any money by way of subscribing to IRFC bonds.
As per a March 2015 memorandum of understanding between the transporter and LIC, the insurer was to provide a financial assistance to the tune of `1.5 lakh crore to the latter’s identified projects between 2015 and 2019. However, insurance regulator Irdai’s single-entity exposure cap for insurers has come in the way of the railway’s plan to raise funds form LIC.
The railway official, however, added that Rs 1,600 crore due from LIC for FY19 will get carried forward and an additional Rs 5,000 crore is likely to come in FY20. “It really does not matter whether funds for EBR (IF) comes from LIC or not as we can raise it through IRFC as well. It will only mean that the railways will have to increase equity in IRFC so that debt-equity ratio is maintained,” said the official.
The Indian Railways is set to raise $750 million from the Asian Development Bank through its financing arm IRFC, which will help the transporter stick to its capex plan for FY20, as reported by FE.