Indian Railways News

Indian Railways News

Auditor Raises Concerns Over Delay In Railway Projects

The Comptroller and Auditor General of India on Wednesday hit out at the Railways, saying it resorting to “window dressing” to present its operating ratio in “a better light” during the financial year 2018-19 by including advance freight payments in its calculations.

It also raised concerns over delays in projects over the past five years due to inefficiency of zones and weak monitoring by the Railway Board.

Operating Ratio (OR) represents the ratio of working expenses to earnings. A higher ratio indicates poorer ability to generate surplus.

In a report on the Railways’ finances tabled in both Houses of Parliament, the Comptroller and Auditor General of India (CAG) said against the target of 92.8 per cent in the Budget Estimates, the OR of Railways was 97.29 per cent in 2018-19. This meant that the national transporter spent ₹ 97.29 to earn ₹ 100.

“However, if advance freight of ₹ 8,351 crore from NTPC and CONCOR was not included in the earnings of 2018-19, OR would have been 101.77 per cent instead of 97.29 per cent,” the report said.

“The Net Surplus in 2018-19 was ₹ 3,773.86 crore. OR would have ended with a negative balance of ₹ 7,334.85 crore but for receipt of advance freight and less appropriation to DRF and Pension Fund.

Ministry of Railways (MoR) resorted to window dressing for presenting the working expenses and operating ratio in a better light,” it said.

The audit report also cast doubts over the Railways” use of its Extra Budgetary Resources (EBR) for project financing which started 2015-16 onwards.

While financial assistance of ₹ 1.50 lakh crore was agreed to by the Life Insurance Corporation (LIC) over a period of five years (2015-20), the audit observed that the financing arrangement with LIC materialized only partially due to regulatory constraints.

“During 2015-19, only ₹ 16,200 crore could be raised from LIC. MoR recouped the shortfall of ₹ 49,164 crore by raising funds through short-term/medium term market borrowings which carry higher rate of interest,” it said.

The report also pointed out that progress remained slow in projects which were to be completed during 2015-20, due to “inefficiency of Zonal Railways and weak monitoring at the Railway Board level”.

“Scrutiny of records relating to 395 projects funded from EBR revealed that 268 projects were still in progress as on March 31, 2019. This had resulted in a blockade of ₹ 48,536 crore EBR funds besides defeating the intended objective of generation of revenue for debt servicing. Review of identification and sanction of projects for EBR funding revealed that financially unviable projects were sanctioned,” it said.

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