Indian Railway Finance Corporation (IRFC), which serves as the market borrowing arm for Indian Railways, will abstain from borrowing any funds in the form of debt during the financial year 2024-25, according to Budget documents.
The government's decision to list Indian Railway Finance Corporation's (IRFC) Internal and Extra-Budgetary Resources (IEBR) as negligible in the 2024-25 budget suggests that it does not intend to borrow money to fund its capital expenditure. This marks the second consecutive year in which IRFC's IEBR has been designated as negligible in the budget.
In 2022-23, IRFC's IEBR was set at Rs 66,500 crore as part of the Budgetary allocations. As part of the government's actual estimates, IRFC's IEBR for 2022-23 came in at Rs 30,239.43 crore in 2022-23. In 2021-22 IRFC had borrowed Rs 60,683.41 crore from the market.
IEBR comprises funds by way of profits, loans and equity.
IRFC’s borrowings are used to buy locomotives, wagons and coaches and fund projects.
As of September 30 2022, IRFC's cash and cash equivalents stood at Rs 97,020.49 crore. The company's total assets stood at Rs 4.97 lakh crore.
The move to not borrow from the market comes in the backdrop of the central government increasing its Budgetary allocation to Indian Railways to Rs 2.52 lakh crore, which is 5 percent higher when compared to 2023-24 and the government's push for divestment and asset monetization.
The government has set an ambitious divestment target of Rs 50,000 crore for 2024-25, about 67 percent higher than its revised aim to collect Rs 30,000 crore via asset sales in the current fiscal year ending March 31.
The push for divestment and asset monetization can also be seen by the government's move to set the National Highways Authority of India's IEBR as negligible in 2024-25.
This is the third straight year that the NHAI's market borrowing has been set as negligible.
In 2022-2023, the government had asked the highway developer to limit its borrowings. In the 2022-23 Budget, the government projected that NHAI’s IEBR would fall to around Rs 1 lakh crore, from Rs 65,000 crore in 2021-22.
As per the government's revised estimates, the NHAI spent no money as IEBR in 2022-23.
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