CAG says Rlys following defective budgeting procedures

IR was further criticized for failing to 'address the observations of the Ministry of Finance

The Comptroller and Auditor General of India has blamed "defective budgeting procedures" adopted by the Railways as the reason for incorrect assessment of funds. Besides, it has also asked to railways to rationalise the tariff structure to improve internal revenue generation.

The Railways was further criticized for failing to ‘address the observations of the Ministry of Finance’, which asked IR to ensure greater fiscal discipline while planning the budget. The report tabled in Parliament today notes various instances of expenditure where grant was either used in excess or remained under-utilised.

IR has also been accused of ‘arbitrary investment decisions’ which were made without adhering to laid down criteria for assessing the economic viability of the projects. The report also asked the IR to verify the authenticity of data used in projecting estimates.

Adding to the dismal performance, the net revenue was below the budget projections by 43.45%- Rs 5,211.53 crore.  Public Accounts Committee (PAC) recommended that existing budgetary mechanisms be thoroughly ‘revamped’ so that the ‘misclassification syndrome’ – various accounting mistakes in the accounts of Zonal Railways-could be overcome. Audit also called to ensure responsibility for each misclassification so that greater diligence is exercised.

The report notes that the Railways' accumulated funds have eroded substantially from Rs. 21,681 crore in 2007-2008 to Rs 1,770 crore in 2011-2012. It recommends the Railways to explore new avenues to recover cost from its service in order to generate sufficient funds. The report notes that the operating ratio decreased slightly from 94.59% in 2010-2011 to 94.85% in 2011-2012, with usual scenario of earnings from freight being eaten up by the losses in passenger operations.