'Pay panel award may affect Railways' cost optimisation process'

The additional burden due to the Pay panel recommendations would be around Rs 30,000 crore (Rs 300 billion) per annum.

Cost optimisation efforts of the Indian Railways will be under pressure this financial year because of implementation of the Seventh Pay Commission recommendations, a top official has said.

"This fiscal, the cost optimisation move of the Railways will be under pressure owing to implementation of the recommendations of the Seventh Pay Commission," Sanjay Mookherjee, Financial Commissioner, Railway Board, told PTI.

"During 2015-16, he said, the Railways saved around Rs 12,000 crore (Rs 120 billion), of which Rs 4,000 crore (Rs 40 billion) came from fuel.

The balance Rs 8,000 crore (Rs 80 billion) was from various austerity measures and also by way of increasing efficiency.

According to Mookherjee, the additional burden due to the Pay panel recommendations would be around Rs 30,000 crore (Rs 300 billion) per annum.

To meet this additional liability, the Indian Railways had built a corpus for the last three years through developing certain funds.

"Part of the liability will be met from these funds and the balance through internal resource generation," he let out.

However, he made it clear that development and expansion of the Railways would not be hit as the resources were provided by the government while LIC had offered Rs 1.5 lakh crore (Rs 1.5 trillion).

The LIC funds will be used to develop infrastructure and the Railways and has a servicing period of 30 years.

Through additional resource generation, the target for finances this year was to increase 10.1 per cent to Rs 1.85 lakh crore (Rs 1.85 trillion) from the earlier Rs 1.67 lakh crore (Rs 1.67 trillion).

Besides, IRFC will raise Rs 20,000 crore (Rs 200 billion) from the market during 2016-17, the Commissioner said.

During the year, the Railways is expected to mobilise a substantial chunk of funds through dynamic pricing, realisation from freight by widening the basket of commodities and higher containerisation.

The Railways would also operate a cold chain infrastructure through a separate subsidiary called Translog, he added.

Image: Commuters try cross railway tracks as trains wait at a suburban station in Mumbai. Photograph: Danish Siddiqui/Reuters