COVID-19: New Rail Projects Barring Safety Work to Be Held in Abeyance

New Delhi: In the midst of the economic slowdown caused by COVID-19 pandemic, as Indian Railways is facing a loss of nearly Rs 40,000 crore in passenger business, has decided to put on hold infrastructure projects sanctioned in the current financial year other than safety-related work.

Besides the heavy loss in passenger segment due to less number of trains plying, there is a dip in freight revenue by 11% in July 2020 as well.

Freight revenue was down 11% in July compared to the corresponding period last year, even though monthly loading was slightly up. The total freight loading was 95.18 million tons, 1.6 million tons higher than in June, according to the Railways data. However, it was 4.6% less than in the same period last year.

Goods revenue touched Rs 8969.58 crore in July, compared to Rs 8829.69 crore in June. Freight revenue in July 2019 was higher at Rs 10,030.12 crore.

Keeping the revenue shortfall in mind, Railways has decided to keep rein in all sanctioned projects.

"New works included in Pink Book 2020-21 shall be kept in abeyance. However, those works which impact the safe running of trains and are considered essential and inescapable may be considered for sanction,” said the Railway Board’s recent order.  

The Railway Board has instructed all zonal railways and production units to review all projects already approved by them.

"Projects that were previously approved but have made insignificant progress shall be kept frozen till further orders except those which are essentially required for safe running of trains,” the order stated.

However, though railways clarified that the order will not affect any ongoing vital infrastructure projects, the financial health of the state-run transporter seems to be grim.

"Umbrella works" of 2018-19 and 2019-20, if any, may be suspended, the order added. Umbrella works refer to projects that have been sanctioned combining similar work at different locations.

“Exemption for sanction of works which are considered essential and inescapable will be obtained from the ministry of finance,” the order added.

The Railways order followed the directive issued by the Finance Ministry in June on government spending in the year.

"It may be appreciated that in the wake of the COVID-19 pandemic, there is unprecedented demand on public financial resources, and a need to use resources prudently in accordance with emerging and changing priorities. However, many new proposals for in-principle approval are being received from ministries/departments," the Finance Ministry directive said.

It seems to be the railways' worst economic performance since Independence. While the RBI has forecast a recession, the first in four decades, it is feared that it will undermine the long-term viability affecting jobs and growth in the future.

Railways is currently running only 230 passenger trains with about 60 to 75% occupancy compared to more than 12,000 daily mail, express and suburban trains it used to operate prior to the pandemic.

As a result, the public transporter is solely banking on freight business to offset losses from the passenger earnings.

According to this year’s budget, it had set a freight loading target of 1,265 million tonnes for 2020-21. The target for freight earnings for the ongoing fiscal is around Rs 1.47 lakh crore, while passenger revenue was estimated at Rs 61,000 crore.

Railway officials, however, said that these estimates are being reworked due to the disruption caused by the lockdown.

Also read: Why Capitalism Is in Constant Conflict With Democracy