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Implementation of renewed wages may cost a burden of Rs. 9,000 crores more
(Jan 30, 2008)
With the coming of budget 2008-09, the major issue that it is likely to witness is to maintain the profitability ratio keeping in view the renewal of wages that can overburden the railways with more than Rs. 9,000 crores.

The Present Picture
In the current scenario, the railways which consists of around 1.4 million employees across the country has a wage bill of Rs. 27,145 crore out of which Rs 18,985 crore is spent on staff related expenditure while Rs 8,160 crore on pension charges. The wage bill constitutes around 38 per cent of its total traffic earnings. The Railways wage rose to Rs 14,141 crore (FY98) from Rs 10,515 crore (FY97) when Fifth Pay Commission was brought into action.

Impact of Hike in Wages
At that time, Fifth Pay Commission planned a 31-per cent hike in base salaries and if in the Sixth Pay Commission, the railways follow the previous pattern of hike of about 30 per cent, it might have to bear the extra burden of Rs.9,000 crores in the wage bill.

As per the internal resources of railways, when Fifth Pay Commission was implemented, the railway system went through a lot of burden and disturbances. With the coming of Sixth Pay Commission into action, the prospects of maintaining the present level of ratio seems to be quite difficult especially, when funds from Central Finances are not very much certain to increase. The resulting impact of such conditions is very much likely to affect pension plan. The railways started the pension plan at Rs. 976 crore (1997-98) that was pulled down to Rs 318 crore (1999-2000), and then finally at Rs 32 crore (2001-02).