A memo circulated by the Southern Railway headquarters stated that the budget allocation for the financial year 2025-26 has been exceeded.
Citing financial constraints, Southern Railway has decided to withhold payment of certain allowances to employees for the month of February 2026.
Officials expressed hope that the Railway Board would soon release a special financial grant to enable payment of allowances for February and March along with the April salary.
According to railway sources, a note circulated by the Southern Railway headquarters stated that the budget allocation for the financial year 2025-26 has been exceeded compared to the actual expenditure incurred so far. As a result, several allowances were excluded from the February salary.
Railway sources said there will be no change in the payment of basic pay and attendance allowance (DA). However, based on circulars issued by finance managers, more than a dozen categories of allowances – including medical reimbursement, night duty allowance and ration money – have been withheld.
As funds remain tight this fiscal, March allowances may also face delays, sources said. The memo did not say whether the arrears would be paid with the April 2026 salary.
Employee representatives have expressed concern over the development. “Even payments for work already done, such as overtime and night duty, are withheld. These allowances are factored into the monthly financial planning of the employees,” said a union official.
Costs exceeded budget
Responding to queries, a senior railway official said that though the budgetary allocation for the fiscal was commensurate with the expected demand and estimated expenditure, additional maintenance costs had to be incurred to protect the railway assets.
“Operating expenses include on-board cleaning services, laundry, bus cleaning and maintenance work. The fact is that funds are currently insufficient. Some supplier payments also remain outstanding,” the official said.
He explained that the earnings from passenger and freight transport were credited directly to the account of the Railway Committee, which then allocated funds annually to the various zones based on the requirements. “The CEO has no provision or discretion to divert earnings for payment of wages or allowances,” the official said.
Impact on the paid workforce
The All India Loco Running Staff Association (AILRSA) has sought immediate redressal of the issue as non-payment of dues would adversely affect the salaried workforce.
“Delaying or denying allowances for work done is unfair. Operations, maintenance, security and medical departments are working round the clock. Withholding due payments is an unfair labor practice,” said V. Balachandran, central organizing secretary, AIRSA.
He said paying travel or mileage for two or three months in a lump sum could create an additional financial burden on locomotive pilots and train conductors as the income tax exemption for such allowances is capped at ₹10,000 per month.
“It is not just a question of money, but of the approach to financial management in a human-intensive organization like Indian Railways. The decision would affect thousands of employees,” Balachandran said.
Incidentally, the Southern Railway is among the largest passenger zones in the country. A senior official said the decision, taken late on Monday, limited the deductions to allowances for mileage, travel and overtime. According to him, additional contributions may be paid.
Published – 23 Feb 2026 20:23 IST
