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Reliance on railway internal funds stressed

Market borrowings have to be kept under very ''close scrutiny'' and efforts should be made to generate internal funds, if the 150-year-old Indian Railways have to maintain financial viability.

In a white paper on rail projects presented to Parliament today by Railway Minister Nitish Kumar, it has been stated the Railways could no longer depend on market borrowings. These had put a heavy burden on them by way of substantial lease charge since both interest and repayment obligations had to be met at a heavy price.

Stressing the need for generating funds internally, the white paper said it was also necessary to provide higher capital support from the general exchequer. Projects requiring heavy investments had to be restricted by and large in preference to commercially viable ones so that adequate funds or operating surpluses are generated.

''Unless this basic principle is kept in mind, the ability of railway system to meet the challenges ahead will be seriously compromised,'' the white paper said .

Since internal resources are not adequate to fully meet the demands for funds to implement various schemes, the railways had to resort to market borrowings through the Indian Railways Finance Corporation set up in 1986 as the primary borrowing agency for Railways.

Some other schemes, including Own Your Wagon Scheme and Build Own Lease Operate Scheme seek to involve the private sector in the development of the railways. But it has been found that increasing dependence of Railways on borrowings from the market would not be in its long-term interest, the white paper said.

The white paper said keeping in view the ''severe resource constraints, outlays for various plan heads have to be pruned so that the limited resources are distributed among the various heads of investments in the most optimal manner''.

UNI