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9.1 The Indian Railways for long have, had a system for funding replacement/renewal of its overaged assets. This has been done through the "Depreciation Reserve Fund"(DRF), created for this specific purpose with effect from 1.4.1924 as recommended by the Committee on Depreciation Fund. Annual need-based contributions are made to this fund from Railway revenues. Presently depreciation provided is about Rs.2000 crores per annum. In addition, the lease charges paid to Indian Railway Finance Corporation include an element of capital recovery of more than Rs.1000 crore per annum, which is analogous to provision for depreciation of Rolling Stock assets. While an exercise to review the codal life of various categories of assets is separately underway, duly reckoning technological changes, assets have to be replaced on occasion before they have completed their codal life because their usage in terms of traffic hauled so warrants and necessitates replacement.

9.2 Investments of a developmental nature, as also on safety related projects have been done through the "Development Fund." Both these funds are sourced from internal generation of resources. While DRF is essentially for replacement and renewals, Development Fund is to meet the expenditure on safety related other works such as track circuiting, interlocking of level crossings, provision of lifting barriers, Foot-over Bridges etc.

9.3 Railway Safety Fund _ Safety at Level Crossings
A Railway Safety fund has been created from 1.4.2001 for financing works related to manning of unmanned level crossings and for construction of ROBs/RUBs at busy level crossings. This fund is financed mainly through receipts from Central Road Fund, which is funded by levying of cess of Rs. 1 per litre on diesel and petrol. The Railways get 12.5% of entire petrol cess and 6.25% of entire diesel cess. Two separate plan heads , viz. Road Safety Works - LCs and Road Safety Works-ROBs/RUBs have been created in 2000-01 for executing these works.

9.4 Special Railway Safety Fund (SRSF)
In pursuance of RSRC's reommendation, a nonlapsable Special Railway Safety Fund of Rs.17000 cr was created in October 2001 to clear the arrears of replacement/renewal of overaged safety related assets viz., track, bridges, S&T gears and rolling stock and to cater to certain safety enhancement works. Out of this, Rs.5000 cr is to be the railway's contribution through safety surcharge on passenger fare and balance Rs.12000 cr in the form of dividend-free budgetary support. To the end March 2003, Rs. 3920 cr have been spent through this fund.

9.5 The Corporate Safety Plan has outlined the role of technology, maintenance practices, modernization and upgradation. There are also important safety policy issues to be decided, which have a bearing on investment profile. An attempt has been made to assess the scenario of approximate fund requirement for broad safety related items in the relevant corporate plan period (Refer Annexures A1 to A10). Also, some of the measures suggested constitute various options available for achieving the same objective and, therefore, the best and the most cost-effective option has to be tried out before a managerial decision is taken to adopt the same.

9.6 While clearing of the arrears of replacement of tracks, bridges, signalling gears and rolling stock would be addresed through the SRSF, annual arising for these items will be taken care of by normal provisioning under DRF. In addition, in the plan period, thrust will be given on safety enhancement works as identified and detailed in annexures A-1 to A-9. The total expenditure involved for these safety enhancement works would be Rs. 31,835 cr. (Refer Annexure A-10) . Out of this Rs.13,000 cr is available under SRSF for sanctioned works in the Green Book. Further, the requirement under Railway Safety Fund works out to Rs. 8900 cr, implying an expenditure of Rs. 890 cr per year. Presently, the availability under this fund is of the order of Rs. 430 cr per year. Experience shows that the expenditure under Railway Safety Fund has been under Rs. 200 cr per year on account of delay on the part of the State Governments to sponsor ROB/RUB works on cost-sharing basis and also delay in execution of their portion of the work. Thus the additional requirement to fulfil the plan would be of the order of Rs.10,000 cr.

9.7 In conclusion, to achieve the Corporate Safety Plan objectives, Indian Railways will have to initiate a number of business reengineering measures and efficiency enhancement steps. Non-budgetary initiatives to meet the project related expenditure will have to be stepped up so that matching funds become available for safety enhancement works outlined in this corporate plan. Besides, a safety oriented scheme to meet the projected requirement of funds may also have to be resorted to, for which the assistance of the Planning Commission and the Ministry of Finance would be sought.