Indian Railways Headed For Bankruptcy

A sharp decline in earnings and a serious escalation in expenditures are threatening to push India’s transport behemoth to near-bankruptcy. The financial situation is such that the Railways may not be left with enough funds this year to appropriate money into two critical reserves that fund its purchase of new assets and improvements in passenger amenities — the Capital Fund and the Development Fund. In fact, last year too, the Railways had failed to provide even a single rupee to its Capital Fund, which is used for buying new assets. Officials point out that the finances took a Rs. 1,000 crore hit due to two hikes in diesel prices this fiscal, while 2 per cent hike in Dearness Allowances and the increase in the number of days for the Performance Linked Bonus raised their expenditure by Rs. 400 crore. The Railways now has a net deficit of around Rs 2,500 crore. “While our expenditure has gone up by almost Rs 1,330 crore, our earnings are down by Rs 1,142 crore,” says a Railway Board official.