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No dividend waiver for Railways this year(thehindu)

The Finance Ministry has rejected the Railway Ministry’s demand for waiving or deferring the payment of dividend for 2016-17, senior railway official said.

The Railways had demanded that the dividend for the divided budgeted for 2016-17 be waived or deferred owing to its poor financial condition in its mid-year review meeting held last month.

“The Finance Ministry didn't agree to our demand of not paying dividend due to weak financial position this fiscal year," a senior Indian Railways' official said, on conditions of anonymity.

After the Railway Budget merges with the Union Budget from next financial year, the Railways will not be required to pay dividend to the Finance Ministry for the capital invested in it. In 2016-17, the Railways were budgeted to pay Rs. 9,731 crore as dividend, whereas the subsidy claimed by the Railways towards loss-making routes was estimated at Rs. 4,301 crore. The net dividend payment to the Finance Ministry was estimated at Rs. 5,430 crore.

The Railways' demand of deferring payment of dividend follows its poor financial performance. In this financial year, till October, the Railways had registered a huge shortfall in its total earnings by Rs 14,284 crore from its total budgeted earnings of Rs 1,03,900 crore. While its passenger earnings fell 10 per cent short of its budget projections, its freight earnings had a 13 per cent shortfall.

The operating ratio, an indicator of the Railways' finances, has touched 113.71 per cent, a far cry from its target of 92 per cent. This means, the Railways is spending around Rs 114 to earn Rs 100.

The Railway Convention Committee, which determines the rate of dividend to be paid, also recommended waiving the dividend for 2016-17 as a one-time move.


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