Economy

CAG: Advance payments by PSUs saved Rlys from showing a negative balance in FY18

Our Bureau New Delhi | Updated on December 02, 2019 Published on December 02, 2019

File photo   -  KSL

Operating ratio of 98.44% was the worst in 10 years

Advances from public sector units saved the Indian Railways from showing a negative balance of over ₹5,500 crore in 2017-2018, said a Comptroller and Auditor General (CAG) report tabled in Parliament on Monday.

The Railways would have ended the year with a negative balance of ₹5,676.29 crore instead of the surplus of ₹1,665.61 crore but for the advance received from NTPC and Ircon, said the report.

In March 2018, NTPC paid the Railways ₹5,000 crore as advance for moving freight in 2018-19; this was added to IR’s earnings of 2017-18.

Also, Ircon paid ₹2,580 crore as advance towards sale or lease of land it would put through in future, said the report.

Without these receipts the Operating Ratio would have surged to 102.66 per cent. The Operating Ratio of 98.44 per cent was the worst in the last ten years, said the report. The Operating Ratio is a number that denotes the amount the Railways has to spend to earn every ₹100.

Higher the ratio, less profitable is the Railways.

The transport behemoth’s revenues were also hit because dividend payouts by Railway PSUs, accruing to IR till 2016-17, moved to the Consolidated Fund of India from 2017-18, said CAG.

Freight to the rescue

The trend of the Railways using profits generated from freight revenues for making good the loss-making passenger traffic continued during the year.

“Almost 95 per cent of the freight profit was used to compensate the loss on operation of passenger and other coaching services (in 2016-17),” said the report. The corresponding number was 85.53 per cent in 2015-16.

The Railways was unable to meet its operational cost of passenger and other coaching services. The only exceptions were AC three-tier and AC chair-car segments, which made operational profits.

One of the contributing factors for this is the free/concessional fare ticket/pass and Privilege Ticket Order (PTOs) issued to various beneficiaries.

Poor response to ‘Give Up’

Almost 89.7 per cent of the revenue forgone on this count was due to concessions extended to senior citizen and privilege pass holders. The response to the ‘Give Up’ scheme from the senior citizen segment was not encouraging, the report said.

The Railways increasingly depends on gross budgetary support and loans for making capital expenditure, the CAG report said. “The net revenue surplus decreased by 66.10 per cent from ₹4,913.00 crore in 2016-17 to ₹1,665.61 crore in 2017-18. The share of internal resources in total capital expenditure also decreased to 3.01 per cent in 2017-18,” said the report. This increased the dependence on gross budgetary support and extra budgetary resources.

Published on December 02, 2019
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