Jan 5, 2017

Budget 2017: Costly train rides ahead as railway ministry mulls safety cess

The railway ministry may push for a special levy on train fares to create a dedicated Rs 1.2 lakh crore safety fund; finance ministry likely to finance 25 percent of the this fund Shreya Nandi Moneycontrol Passengers may have to shell out more for travelling by train as the railway ministry may impose a specific cess on train tickets to fund the Rs 1.20 lakh crore safety fund-- Rashtriya Rail Sanraksha Kosh.
While fares for AC one-tier and two-tier are likely to see a marginal increase, passengers travelling on second class and AC three-tier could be hit harder because of a proportionately lower fare base. An announcement on imposing a safety cess on train fares is likely to be announced in the budget for 2017-18, which finance minister Arun Jaitley is scheduled to present on February 1. Last month, railway minister Suresh Prabhu had written to Jaitley requesting complete funding for the fund. The finance ministry, however, rejected the railway ministry’s proposal for financing of the new safety fund from the consolidated fund of India. The finance ministry has agreed to finance only 25 percent of the fund and has asked the railways to raise the remaining three-fourth of the required sources for the special corpus. This will be a specific cess, like the road cess collected on sale of diesel to build highways. The money collected through this cess will be pooled into the Rashtriya Rail Sanraksha Kosh and administered by the railways for a specific purpose. A committee, constituted by the railway ministry, for putting together a consolidated proposal for creation of the safety cess, in its report, has envisaged works of track renewal and upgradation, bridge rehabilitation, elimination of level-crossings, construction of road over bridges/road under bridges, replacement and improvement of signalling system, among others. The cess will likely be part of the union budget with the government merging the railway budget with the central budget from 2017-18. A key reason for the abandoning the 92 year-old practice of a separate railway budget from 2017-18 may have been hastened by the state-transportation giant’s delicate balance sheet. It is learnt that the Railways Ministry had sought exemption from paying dividends to the Centre this year, amid rise in additional salary and pension spending following the seventh pay commission recommendations. A combined budget could free the Indian Railways from setting aside nearly Rs 10,000 crore towards dividends to the government every year. Once the budgets are merged, the financial stress can be moved to the Centre’s overall annual financial plan.
Source - Money Control