CAG faults railways over 'lack of financial discipline'

Railways has come in for scathing criticism over "lack of financial discipline" from the CAG which said it is not following its own rules and regulations laid down in the financial code for execution of projects and proper accounting of transactions.
The report of the Comptroller and Auditor General of India (CAG), which was tabled in Parliament today, said the issue is significant especially as a large number of projects are under implementation.
"In the absence of proper records, it is not possible to ascertain expenditure incurred in executing a project," the CAG said in its report for the 2012-13 fiscal.

The report said, "It indicates a lack of financial discipline and increases risk of losses - both material and financial in implementation of projects. This assumes significant importance in view of the large number of projects under implementation in the Railways."
CAG has recommended that railways needs to put in place a monitoring mechanism to ensure that the provisions laid down in the codes and manuals are followed scrupulously to maintain financial discipline.
"Executives need to be made responsible for ensuring proper project accounting to exercise effective control over expenditure with reference to sanctioned estimates and budget allotments against the projects," it said.

Punching holes in the national transporter's performance, CAG has found that completion reports were not prepared for 674 projects completed or commissioned prior to March 2011.

"This includes 92 projects commissioned during the last three years (2008-09 to 2010-11) and 466 projects commissioned during the last three years ago," it said.
It observed that the date of completion of 116 projects was not on record. "Cases of expenditure in excess to sanctioned estimate remained unregularised for decades and has led to the situation of no control over expenditure on capital works."
Coming down heavily on Railway Ministry, CAG said it incurred expenditure more than its agreed percentage of cost due to non-following of the terms and conditions of the agreements executed with the state governments relating cost-sharing projects.

It also noted that fund balances had declined from Rs 15,654.48 cr in 2008-09 to Rs 4073.41 cr in 2012-13.
CAG found railways is "incurring a loss on its core activities". During 2011-12, there was a loss of about RS 23,640 crore on passenger and other coaching services while freight services made a profit of Rs 23,077 crore.