Railways suffered huge loss over iron ore booking: CAG

In its latest report it found that iron ore carried at domestic rate but not consumed for domestic purposes and diverted for third party trading or export resulted in loss to the exchequer

Railways has suffered a huge loss of over Rs 29,000 crore in freight earning due to the non-compliance of rules in iron ore booking, according to a report by the Comptroller and Auditor General of India.

The CAG in its latest report tabled in Parliament today found that iron ore carried at domestic rate but not consumed for domestic purposes and diverted for third party trading or export resulted in loss to the exchequer.

Audit has highlighted the deficiencies in compliance with laid down rules and procedures in booking and delivery of iron ore at domestic rate by concerned railway officials that resulted in a financial loss of expected goods earnings to the extent of Rs 29,236.77 crore during May 2008 and September 2013.

Railways failed to do the needful and allowed the manufacturers to transport iron ore at concessional rates, the report said.

Iron ore is an important commodity transported by railways for domestic consumption and export.

The national auditor reviewed the records connected with 83 major loading points over seven zonal railways and 180 major unloading points over 15 zonal railways during the period between May 22, 2008 to September 30, 2013 to check compliance with laid down rules and procedures for booking and delivery of iron ore at domestic rate by Railways and assess the quantum of freight evasion and leviable penalty due to non-compliance, if any besides detection of cases involving any diversion/removal of iron ore booked at domestic consumption rate.

Railways had introduced the dual freight policy (DFP) from May 22, 2008 as per which transportation of iron ore was categorised in two parts - domestic consumption and other than domestic consumption. "There were inherited deficiencies in the framework of the DFP for iron ore," the report said.

The DFP in effect led to freight difference between the domestic and export category, which was on an average more than three times.

Audit observed that Railways did not lay down adequate internal controls check and balances for effective implementation of DFP.