Several reports, including the latest one on railway restructuring, have called for accounting reforms of Indian Railways. But just because there’s a report doesn’t mean something actually gets done. The recommendations of several previous studies on accounting reforms, including one funded by ADB many years ago, are yet to be implemented.

Not allowing for depreciation — which basically means keeping aside funds every year for maintenance of the vast railway system — is probably the biggest issue with IR accounting at the moment.

This can jeopardise the safety of over two crore passengers every day and drain the finances of the system if it has to wait for the assets to wear out. Also, IR has its own finance cadre, which has data regarding the costs. Accounting reforms will bring to fore the exact extent of subsidy that railways will have to set aside to meet social obligations of various kinds.

This also requires sharing of costs by all stakeholders such as State governments and defence, among others. In other words, this will require clearing up the finances between the Centre and IR, as pointed out in the Debroy Committee report.

Dinesh Trivedi, chairman of the parliamentary standing committee on railways and former railway minister, even compared IR’s accounting norms with a paan shop that accounts for depreciation one year and not the next. The committee noted that about ₹55,000 crore worth safety-related works are pending.

It was in such circumstances that in the first full term of a BJP-led coalition government — when Vajpayee was Prime Minister, and train accidents were on the rise — that the Centre helped IR led by Nitish Kumar (JDU) by allowing him to introduce a five-year non-lapsable special railway safety fund (SRSF). Since then several railway ministers, including Suresh Prabhu, have sought support from the leadership to introduce similar non-lapsable safety funds, a move that has not yet yielded results.

Prabhu has also stressed on the need for the railways to implement accounting reforms. But to implement these, the minister requires full backing from the Prime Minister. Will Modi oblige?

Senior Assistant Editor

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