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No money for expenses, says rly ministry
Published on 12 Feb. 2011 1:34 AM IST
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In an extraordinary circular, the Ministry of Railways has said no expenses should be made until 31 March, indicating that it has no money.
The circular was issued on 3 February, of which a copy is with Tehelka, and it has virtually frozen railway accounts.
When no money is available to spend, no activity takes place. Therefore, the railway ministry may have reached a standstill. This would stall construction of new lines, procurement of wagons, training programmes, renovation of platforms, passenger amenities, etc. The circular comes just days before the Railway Budget is to be presented.
The railway ministry has been bust for some time, but senior railway sources say this circular is the first such restriction in living memory. For the record, this is what the circular says: “The Railways/Units are to ensure that the adjustment in excess of Budget Grants is carried out wherever necessary only after Supplementary are voted by Parliament and sanctioned by the President. The expenditure may be so regulated that no excess is incurred over and above the allotments given.”
The railways have a plan Budget outlay of Rs.41,000 crore for 2010-11. Assuming, this is divided into four quarters. So, every three months, the railways have Rs.10,000 crore to spend in the plan outlay. Thus, the railway ministry is saying it is short by about Rs.10,000 crore. In effect, the railways are back to the bankruptcy days of 2001. But even in 2001, the ministry did not have to issue such a circular.
For expenses between January 15 and February3, the railway ministry has asked its units to wait until Parliament clears them
To understand the situation, let us say an individual is allocated Rs.100 and is given Rs.75. Later, the individual is told that he must consider Rs.75 his allocation. If he needs the other Rs.25, he must wait for it to be cleared, possibly several months. His account has, in effect, been frozen. In the case of the railways, the shortfall could be Rs.10,000 crore.
Also, Parliament normally votes on supplementary expenses in August. It is possible, therefore, that the cash crunch in the railways could be long. As of now, it is not clear how and where the railway ministry has spent all of its allocation much before the end of the financial year.
When contacted, Executive Director, Railway Budget, Jagmohan Gupta said, “The circular is nothing new. The Budget is a dynamic exercise. We have only asked the units not to exceed the Budget allocated to them.”
In the normal course, there would be no need to issue a circular on that. Since the ministry can only spend what they have, circulars are not issued telling them to stick to the Budget allocated. In mid-January, the railways asked its units to submit the expenses they incurred. After taking stock, the ministry told the units that they should consider what they have spent until 3 January as their allocation.
For expenses between 15 January and 3 February, the ministry has asked its units to wait for Parliament and the President to clear them. This, as indicated above, happens in August. When asked about the mid-January audit, Jagmohan Gupta said, “We assessed the expenditure of each unit and issued new allotments according to the expenditure pattern”.
Railway Minister Mamata Banerjee has been focusing on West Bengal and is not around much in the railway headquarters. But it is on her watch that the railways are back in trouble. Mamata’s predecessor Lalu Prasad was lauded for scripting a railways return from bankruptcy. Lalu’s model was simple: make trains faster, longer and heavier.
Mamata, however, focused elsewhere. She constituted a Committee on Heritage and Culture, which recently brought out a railway publication on the 150th birth anniversary of Rabindranath Tagore. She spent crores on constructing medical colleges in Kolkata and other cities for children of railway employees. She set up a film institute to train railway employees in making films, and to nurture such talent in the railways. She began Rs.Yuva’ trains to ferry unemployed youth in Kolkata for free.
She provided ‘gold’ railway passes for air-conditioned first class travel to persons of eminence in culture, literature and theatre in Kolkata.
All this may have added to the expenses.
In his time, Lalu brought down the expenditure to Rs 75.9 for earning earn Rs 100.
Now, Mamata is spending Rs 97.5 to earn Rs 100.

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