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Railways Resorted to 'Window Dressing' to Show Better Operating Ratio in FY 2018-19: CAG Report

Indian Railways.

Indian Railways.

It also raised concerns over delays in projects over the past five years due to inefficiency of zones and weak monitoring by the Railway Board.

The Comptroller and Auditor General of India on Wednesday hit out at the Railways, saying it resorting to "window dressing" to present its operating ratio in "a better light" during the financial year 2018-19 by including advance freight payments in its calculations. It also raised concerns over delays in projects over the past five years due to inefficiency of zones and weak monitoring by the Railway Board.

Operating Ratio (OR) represents the ratio of working expenses to earnings. A higher ratio indicates poorer ability to generate surplus. In a report on the Railways' finances tabled in both Houses of Parliament, the Comptroller and Auditor General of India (CAG) said against the target of 92.8 per cent in the Budget Estimates, the OR of Railways was 97.29 per cent in 2018-19. This meant that the national transporter spent Rs 97.29 to earn Rs 100.

"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 report said. "The Net Surplus in 2018-19 was Rs 3,773.86 crore. OR would have ended with a negative balance of Rs 7,334.85 crore but for receipt of advance freight and less appropriation to DRF and Pension Fund. Ministry of Railways (MoR) resorted to window dressing for presenting the working expenses and operating ratio in a better light," it said. The audit report also cast doubts over the Railways' use of its Extra Budgetary Resources (EBR) for project financing which started 2015-16 onwards. While financial assistance of Rs 1.50 lakh crore was agreed to by the Life Insurance Corporation (LIC) over a period of five years (2015-20), the audit observed that the financing arrangement with LIC materialized only 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 said. The report also pointed out that progress remained slow in projects which 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.

The CAG report stated that an amount of Rs 15,922 crore was incurred from EBR towards 79 unremunerative projects. The criteria for exclusion of projects pending land acquisition and other norms was not followed. It also said 111 such projects were funded from EBR. None of these were completed as on March 31, 2019. There were instances of irregular utilization to the tune of Rs 1,495 crore from EBR funds. It further said during 2018-19, Indian Railways generated total internal earnings of Rs 1,90,507 crore against the targeted internal earnings of Rs 2,01,090 crore.

"The Railways could not achieve even revised estimate target of Rs 1,97,214 crore. The total internal earnings also included Freight advance of Rs 8,351 crore received from NTPC and CONCOR for transportation of goods in 2019-20. "Audit noted that there was heavy dependence on transportation of coal which constituted around 47 per cent of the total freight earnings of Rs 51,067 crore during 2018-19. Any shift in bulk commodities transport pattern could affect the freight earnings significantly," it said. The CAG also drilled holes into the Railways' elaborate plans to control rail traffic during the Kumbh Mela in 2019. It said the Railways had failed to address issues such as running of special trains, works related to passenger amenities and safety, medical facilities to passengers, waste management at station premises during the Kumbh Mela in 2019. This caused inconvenience to passengers which was not adequately addressed by Railways, the report said. "Temporary fencing at vulnerable locations (track & station entry point) were not completed. This led to cases of free movement of cattle on tracks and passengers trespassing. Audit noted that the Railway estimated (September 2018) an evacuation of 33 lakh passengers, which was subsequently revised (December 2018) to 45.48 lakh. Railways initiated a figure of 73.66 lakh evacuation of passengers during Mela period," it said.

It also noted that though the Railways planned 821 special trains, theyran only 565 special trains. "A significantly higher number of passengers, with fewer special trains resulted in large overcrowding of trains and caused much inconvenience to passengers," it said.


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