New Delhi, In a remarkable move, the Indian Railway Finance Corporation (IRFC) has announced its decision to abstain from market borrowing in the form of debt during the financial year 2024-25, as disclosed in the latest Budget documents. Serving as the market borrowing arm for Indian Railways, IRFC’s choice to forgo external debt comes in the wake of the central government’s notable increase in the Budgetary allocation to Indian Railways, reaching Rs 2.52 lakh crore—reflecting a 5 percent surge compared to the previous fiscal year.
The Budget outlines the government’s classification of IRFC’s Internal and Extra-Budgetary Resources (IEBR) as negligible for the upcoming fiscal year. This strategic move marks the second consecutive year where IRFC’s IEBR has been designated as negligible, emphasizing a clear intent to refrain from borrowing to fund its capital expenditure.
In the fiscal year 2022-23, IRFC’s IEBR was initially set at Rs 66,500 crore in Budgetary allocations. However, the actual estimates revealed a utilization of Rs 30,239.43 crore, underlining a significant variance. In the preceding fiscal year 2021-22, IRFC had borrowed Rs 60,683.41 crore from the market.
The IEBR encompasses funds derived from profits, loans, and equity, reflecting the financial avenues through which IRFC sustains its operations, such as procuring locomotives, wagons, coaches, and supporting various projects.
As of September 30, 2022, IRFC’s robust financial position showcased cash and cash equivalents amounting to Rs 97,020.49 crore, with total assets valuing at Rs 4.97 lakh crore.
The decision not to borrow aligns with the government’s broader strategy of increased Budgetary allocation to Indian Railways, reaching Rs 2.55 lakh crore in FY 2024-25, marking a 5 percent increment from the previous fiscal year. This move also echoes the government’s emphasis on divestment and asset monetization, as reflected in the ambitious divestment target of Rs 50,000 crore for the fiscal year 2024-25—an impressive 67 percent higher than the revised aim for the current fiscal year.
The government’s focus on divestment and asset monetization is further evident in its decision to categorize the National Highways Authority of India’s (NHAI) IEBR as negligible for the fiscal year 2024-25, aligning with a trend observed for the third consecutive year.
The IRFC’s strategic choice not to borrow amid heightened Budgetary allocations and the broader divestment agenda underscores a distinctive fiscal approach in navigating the challenges and opportunities within the Indian economic landscape.
