CAG paints grim picture of Railway’s finances

Our Bureau | | Updated on: Dec 21, 2021

Net worth of 90 companies had been completely eroded resulting in negative aggregate net worth of ₹1,15,829 crore

The CAG found that during 2019-20, Railways generated total receipts of ₹1,74,694.69 crore against Budget Estimates of ₹2,16,935 crore

A CAG report on the finances of Railways paints a grim picture based on earnings, expenditure, reserves and operational efficiency. The government auditor recommended that the Railways take steps to diversify its freight basket to enhance earnings and also exploit its idle assets to increase other earnings.

The CAG has asked Railways to take steps to augment internal revenues, to reduce dependence on Gross Budgetary Support and Extra Budgetary Resources. The CAG said there is a need to revisit the passenger and other coaching tariffs to recover cost of operations in a phased manner and reduce losses in its core activities. The Railways was also told to ensure that surplus and Operating Ratio represent a true picture of its financial performance.

Decrease in receipts

The CAG found that during 2019-20, Railways generated total receipts of ₹1,74,694.69 crore against Budget Estimates of ₹2,16,935 crore.

“The Railways could not achieve even the revised estimate target of ₹2,06,269 crore. The total receipts decreased by 8.30 per cent during 2019-20 as compared to the previous year,” the report said, adding there was heavy dependence on transportation of coal, which constituted around 49 per cent of the total freight earnings.

The net surplus of Railways was ₹1,589.62 crore in 2019-20, as compared to ₹3,773.86 crore in 2018-19. “Railways would have ended with a negative balance of ₹26,328.39 crore instead of surplus, had the actual amount (₹48,626 crore) required to meet the expenditure on pension payments of Zonal Railways been appropriated to the Pension Fund,” it said. Seventy three per cent of the total working expenditure of the Railways is on staff cost, pension payments and lease hire charges on rolling stocks.

Declining OR

The report said against the target of 95 per cent Operating Ratio in the Budget Estimates, it was 98.36 per cent in 2019-20. “It would have been 114.35 per cent, if the actual expenditure on pension payments was taken into account,” it said, adding that the OR shown does not reflect the true financial performance.

The audit noted that for the first time, the overall fund balances, turned into negative balance of ₹25,730.65 crore in 2019-20.

Meanwhile, the overall profits of the Railway PSUs during the past three years increased from ₹4,999 crore (2017-18) to ₹6,536 crore (2019-20). Of the 40 Railway PSUs, 30 made profit after tax, and 11 declared dividend amounting to ₹1,856 crore. Return on Equity decreased to 7.53 per cent in 2019-20, the report said.

It observed that incomplete migration of legacy data to “Integrated Payroll and Accounting System” resulted in data inconsistencies in employee database. “Several instances of acceptance of erroneous data by IPAS, irregular withdrawal of PF, National Pension System and excess payment of allowances to employees were observed,” it added.

Published on December 21, 2021
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