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Saturday, October 24, 2020

Railways ‘window-dressed’ finances in 2018-19: CAG report in Parliament

The report also said progress in projects to be completed in 2015-20 was slow, due to ‘inefficiency of Zonal Railways and weak monitoring at the Railway Board level’.

Written by Avishek G Dastidar | New Delhi | September 24, 2020 2:17:17 am
Festival Special trains, South Western Railway, Karnataka Railways, Ministry of Railways, Bengaluru news, indian expressIt has been proposed that these trains should be operated at a minimum speed of 55 kilometers per hour to make them reach in par to superfast services. (File)

Railways resorted to “window dressing” of its finances to present its Operating Ratio in better light in 2018-19, the Comptroller and Auditor General said in its report tabled in Parliament Wednesday.

Operating Ratio is the ratio of working expenses to traffic earnings, the lower the better.

The CAG in its report said that against the Operating Ratio (OR) target of 92.8 per cent in the Budget Estimates, the Railways’ was 97.29 per cent in 2018-19. This meant that railways spent Rs 97.29 to earn Rs 100.  Thanks to advance freight earnings of over Rs 8,000 crore taken in the year to actually carry the freight the following financial year, the ratio was shown to be better than it actually was.

“However, if advance freight of Rs 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 Net Surplus in 2018-19 was Rs 3,773.86 crore. IR would have ended with a negative balance of Rs 7,334.85 crore but for receipt of advance freight and less appropriation to Depreciation Reserve Fund and Pension Fund. Ministry of Railways (MoR) resorted to window dressing for presenting the working expenses and operating ratio in a better light,¨ the report said.

The audit report also cast doubts over the Railways’ use of its Extra Budgetary Resources (EBR) for project financing, which started from 2015-16. While financial assistance of Rs 1.50 lakh crore was agreed to by Life Insurance Corporation (LIC) over a period of five years (2015-20), the audit observed that the financing arrangement with LIC materialised partially due to regulatory constraints.

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

It also pointed out that progress remained slow in projects that 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 Rs 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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