The finance ministry has turned down a request by the Railways’ for an extra

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Rs 5,000 crore to support its ‘core plan’ for enhancing capacity. The core plan was to be part of the rail budget on Wednesday.

The proposal was to set up a separate capacity augmentation fund of Rs 25,000- 30,000 crore. The railway ministry had written to the Planning Commission last week seeking an additional Rs 5,000 crore, to start with, as budgetary support in 2010-11for the plan. The letter was later sent to the finance ministry.

“The finance ministry has said that the Railways should look at either public-private partnership or seek support from state governments for enhancing its capacity,” a railway ministry official told Financial Chronicle.

A Planning Commission official, who confirmed Yojana Bhavan having received the letter from the Railways, however said that he was not aware of the finance ministry’s response.

The Railways, under the core plan, want to undertake 147 infrastructure projects, including for 19 new lines, 11 for gauge conversion and 98 for line doubling. The Railways have already sanctioned 136 projects while another 11 are proposed to be cleared.

These 136 projects are estimated to cost around Rs 21,600 crore. The capacity augmentation is required to meet the growing traffic especially in transport of steel, iron ore, cement and port-based cargo.

Railway minister Mamata Banerjee, who will present the budget on Wednesday, is still trying to get the maximum funding from the finance ministry, officials said. According to a railway official, even on Monday, the minister was trying hard to convince the plan panel for more money.

“She (Banerjee) has discussed the issue again with the Planning Commission this (Monday) morning,” an official said.

Railways’ freight loading during April 2009 to January 2010 has grown 7.29 per cent. It carried 730.96 million tonnes of commodities during April 2009-January 2010 against 681.28 million tonnes in the same period a year ago. Railway officials expect this to grow even more considering that the overall economic growth is picking up and demand has improved.

“The capacity augmentation is required not because we have reached a saturation point and cannot carry more commodities beyond a certain limit. The idea is to meet the future demand. In sectors such as steel and cement, the production areas are scattered. Once there are more steel or cement plants in different locations, we would need to connect them with better infrastructure,” another railway ministry official said.

The Railways are likely to get only about 10 per cent increase over last year’s gross budgetary support of Rs 15,800 crore to support the annual plan for 2010-11.