CAG report raps railways

Says it lost about Rs 4,300 crore in 2008-2012 because of improper documentation

Between 2008 and 2012, Indian Railways lost revenue of about Rs 4,300 crore due to failure to ensure proper documentation of transporting iron ore under the dual pricing system, according to the Comptroller and Auditor General (CAG).

In a report tabled in Parliament on Tuesday, CAG said the railways lost revenue of Rs 2,487 crore on this account, according to an audit conducted between May 2008 and March 2012. This had also led to additional losses of Rs 1,796 crore in revenue during 2011-12, as reported by CAG in an previous report.

“The internal control system of the railways failed, as it had allowed the parties concerned to avail of the domestic rate (of transporting iron ore) without providing some essential and prescribed documents,” the report said.

Under the dual pricing system introduced in May-July 2008, the freight rate for transporting iron ore for non-domestic consumption was more than three times the fixed rate to transport coal for domestic consumption. The report said about Rs 15,500 crore was to be recovered as penalty and recovery from various iron export companies.

The report added South Eastern Railways had acknowledged freight evasion of Rs 1,876 crore.

It said lapses had occurred at all levels, including by the booking staff at loading-unloading points and commercial and account officers at the divisional and zonal levels. The “Railway Board failed to stipulate specific checks and balances for implementing their orders”, the report said.

The auditor said due to the “limited action” taken to remove bottlenecks that deterred the movement of traffic by shorter routes, the railways had incurred losses worth Rs 422.74 crore.

In January 2007, East Central Railways had purchased 219 acres of land for about Rs 140 crore, without “any clear cut decision on utilisation”, the report said. Of this, Rs 112 crore was raised through a loan that resulted in interest liability of Rs 8.8 crore, CAG said.

The report said 65 per cent of overhauled locomotives reported failure within three months of periodic overhauls. Detention of locomotives during unscheduled repairs, excess detention and other operational inefficiencies had led to a loss of Rs 733 crore, in terms of earning capacity wastage.