Economy

Ministry of Railways window dressing finances: CAG

Our Bureau New Delhi | Updated on September 24, 2020 Published on September 24, 2020

Financial assistance of ₹1.50 lakh crore extended by LIC for 2015-20 period could be used only partly due to regulatory constraints

The Indian Railways is window dressing finances to present working expenses and operating ratio in a better light according to the Comptroller and Auditor General (CAG) of India.

In the CAG’s Report on Railways Finances tabled in the Parliament on Wednesday, the auditor noted that the Operating Ratio (OR) of the railways was not meeting targets. The OR represents the ratio of working expenses to traffic earnings. A higher ratio indicates poorer ability to generate surplus.

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Advance freight benefit

“Against the target of 92.8 per cent in the Budget Estimates, the OR of railways was 97.29 per cent in 2018-2019. This meant that railways spent ₹ 97.29 to earn ₹ 100. However, if advance freight of ₹ 8,351 crore from NTPC and Container Corporation of India was not included in the earnings of 2018-2019, OR would have been 101.77 per cent instead of 97.29 per cent.”

“The Net Surplus in 2018-2019 was ₹ 3,773.86 crore. Indian Railways would have ended with a negative balance of ₹ 7,334.85 crore but for receipt of advance freight and less appropriation to Depreciation Reserve Fund and Pension Fund,” the CAG said.

Taking a harsh view on the moves, the CAG said, “Ministry of Railways resorted to window dressing for presenting the working expenses and operating ratio in a better light.”

Extra budgetary resources

CAG said that the Ministry of Railways resorted to Extra Budgetary Resources for project financing from 2015-2016 onwards. “Financial assistance of ₹ 1.50 lakh crore was agreed to by Life Insurance Corporation (LIC) over a period of five years (2015-2020). Audit observed that the financing arrangement with LIC materialised partially due to regulatory constraints,” the CAG said.

During 2015-2019, only ₹ 16,200 crore could be raised from LIC. The Ministry of Railways recouped the shortfall of ₹ 49,164 crore by raising funds through short-term/medium term market borrowings which carry a higher rate of interest, the CAG added.

In another CAG tabled on Wednesday, the CAG said that deficiencies or irregularities were noticed during the course of audit over Indian Railways during the year 2017-2018.

Inadequate service during Kumbh Mela

The CAG report on Railways – Compliance Audit was also laid on the table of both Houses of Parliament on Wednesday.

The report said that issues such as running of special trains, works related to passenger amenities and safety, medical facilities to passengers, waste management at station premises were not adequately addressed by Railways during the Kumbh Mela, 2019.

The Mela was held between January 15, 2019 and March 4, 2019 for 49 days.

“Railways had an integral role in ensuring smooth organisation of the event by actively coordinating with the State Government. Audit noted that issues such as running of special trains, works related to passenger amenities and safety, medical facilities to passengers, waste management at station premises were not adequately addressed by Railways. These caused inconvenience to passengers coming for the Kumbh Mela. Temporary fencing at vulnerable locations (track & station entry point) were not completed. This led to cases of free movement of cattle on tracks and passengers trespassing,” the CAG said.

“Railways planned 821 special trains. They, however, ran only 565 special trains. A significantly higher number of passengers, with fewer special trains resulted in large overcrowding of trains and caused much inconvenience to passengers,” the Auditor said.

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Published on September 24, 2020
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