Won’t let railways default on payments, says Jaitley

NEW DELHI: Finance minister Arun Jaitley has said the government will not allow the Indian railways to default on payments, amid indications that plans were on to

NEW DELHI: Finance minister Arun Jaitley has said the government will not allow the Indian railways to default on payments, amid indications that plans were on to merge the rail and general budgets from next year.

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“The Indian railways is too important an organisation in the government,” Jaitley told HT in an exclusive interview on Friday. “I don’t think we will ever allow it to default. And I don’t see the possibility of any default.”

Sources, who did not wish to be identified, said the railways, facing a cash operating loss of Rs 20,000 crore, have sought exemption from paying dividends to the government this year to manage their precarious finances on account of falling revenues. If the crisis persists, the railways may struggle to pay salaries and pensions.

The government is examining the option of integrating the rail and general budgets, a move that will end a 92-year-old practice of a separate budget for the state-owned transportation giant.

“That’s a pending issue. It is still under discussion,” Jaitley said. The financial burden can be transferred to the finance ministry if the budgets are merged. In a letter to Jaitley in June, rail minister Suresh Prabhu has argued that a common budget will allow a seamless national transportation policy, insulating the railways from political pressures.

Jaitley said the current slump in the exports had also hurt railway finances. “Please don’t forget, if overall trade is down, railways suffer,” the minister said.

Responding to another question, he said the soon-to-be-formed GST council would decide on the character of supplementary goods and services tax bills, keeping the door ajar for introducing these pieces of legislation as “financial bills” as per the Congress’s demand.

“The character of a bill doesn’t depend on the option of a minister. It depends on the contents of that bill, ”Jaitley said .“The draft will be approved by the GST council where we will also have the Congress’s finance ministers (from the states they rule) approving it. So, the characterisation will depend on what kind of a bill is approved by them .”