Rail, finance ministries at odds over listing of railway PSUs
20 Feb 2017
The Indian Railways has brought in SBI Caps, a wholly-owned subsidiary of the State Bank of India, to study the budget proposal of listing IRCTC, Ircon and IRFC amidst a brewing tussle with the finance ministry over parting with dividends.
''We have asked SBI Caps to study and advice within a month on the listing of the PSUs of Indian Railways. It would also suggest whether they should be listed separately or a holding company should be formed before listing. Based on the report, a draft plan will be made, which would take about two to three months,'' reports quoted a senior railway official as saying.
Less than a fortnight after the historic merger of the Railway Budget with the Union Budget, the Railways and Finance Ministries do not see eye-to-eye on some critical issues, including finances.
The finance ministry, which has taken charge of presenting the annual accounts for the railways, has asked the railway ministry to hereafter remit the annual dividends it receives from the 14 central public sector units (CPSUs) under its purview.
The railway ministry had earlier argued against scrapping the railway budget as it feared this would lead to loss of revenue for the ministry if it were to part with the dividends from the CPSUs – estimated at about Rs850 crore for 2017-18.
While presenting the budget for 2017-18, finance minister Arun Jaitley had said the government would put in place a revised mechanism to ensure the time-bound listing of identified central public sector companies on the stock exchanges as it will foster greater public accountability and unlock their true value.
''The shares of railway public sector enterprises (PSEs) such as IRCTC, IRFC and Ircon will be listed on the stock exchanges,'' Jaitley had said.
IRCTC handles the catering, ticketing and tourism operations of the Railways and is the country's largest online ticketing company.
Ircon is an engineering and construction entity specialising in transport infrastructure while IRFC is the railways' financing arm.
Officials said the amount of divestment would differ from one PSU to another - at least a 10-per cent stake sale or more. Though the budget has spelt out a stake sale in three companies, there are indications that more could be listed, they said.
Till date, Container Corp of India (Concor) is the only listed railway PSU.
Officials said if the Railways divested its stake in these three companies, the proceeds would go to the finance ministry and would not add to the revenue of the Railways. However, if the railways form a holding company, the proceeds from divesting the subsidiaries will go to the holding company.
The divestment proceeds will be ploughed back into the holding company and redeployed to improve the Indian Railways, the officials added.
According to the budget documents, the government plans to raise Rs72,500 crore through divestment in central PSUs in 2017-18, higher than the Rs45,500 crore raised in the current fiscal, according to the revised estimate (RE).
