Report of the Comptroller and Auditor General of India
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Report of the Comptroller and Auditor General of India For the year ended March 2018 Laid in Lok Sabha/Rajya Sabha on _______________ Union Government (Railways) Railways Finances Report No. 10 of 2019 Table of Contents Particulars Paragraph Pages Preface Executive Summary (i) – (ii) CHAPTER 1 – State of Finances Summary of Current Year’s Fiscal Transactions 1.1 1-3 Resources of IR 1.2 3-11 Cross-Subsidization of Passenger and other Coaching 1.3 11-12 Services Application of Resources 1.4 13-18 Revenue Surplus 1.5 18 Efficiency Indices 1.6 18-20 Railway Funds 1.7 20-24 Conclusion 1.8 24-25 Recommendations 1.9 26 CHAPTER 2 – Concessions to Passengers in Indian Railways Introduction 2.1 27 Background 2.2 27 Audit Objectives 2.3 28 Audit scope and methodology 2.4 28 Sample size 2.5 29 Audit findings 2.6 30-51 Conclusion 2.7 51-52 Recommendations 2.8 52-53 Glossary of Terms 54-55 Appendix 56-64 Annexure 1 to Annexure 10 65-90 PREFACE This Report has been prepared for submission to the President of India under Article 151 of Constitution of India. Chapter 1 of the Report contains audit observations on matters arising from examination of Finance Accounts of Indian Railways for the year ended 31 March 2018. It focuses on the financial health of the Railways based on various parameters. Chapter 2 of the Report contains audit observations on the impact of the concessions allowed to passengers on Railways earnings and the effectiveness of the existing internal control mechanism to check misuse of concessions. EXECUTIVEEXECUTIVE SUMMARY SUMMARY EXECUTIVE SUMMARY BackgroundBackground IndianIndian Railways Railways (IR) (IR) is a departmentalis a departmental commercial commercial undertaking undertaking of the of Government the Government of India.of India. Due Due to merger to merger of Railway of Railway Budget Budget with with the Unionthe Union Budget, Budget, the summarythe summary and andcomments comments on the on Appropriation the Appropriation Accounts Accounts of IR of are IR now are now included included in the in Report the Report of theof Comptroller the Comptroller and andAuditor Auditor General General of India of India on Union on Union Government Government – Accounts – Accounts of theof Unionthe Union Government Government (Financial (Financial Audit). Audit). The Thereport report focuses focuses on financial on financial performance performance of Indian of Indian Railways Railways with with reference reference to to the previousthe previous year, year, as well as well as the as overallthe overall trends trends.. It also It alsocontains contains the resultsthe results of the of the analysisanalysis of the of impactthe impact of concessions of concessions allowed allowed to various to various categories categories of passengers. of passengers. SummarySummary of conclusion of conclusions s SinceSince 2016 2016-17, -railways’17, railways’ revenue revenue surplus surplus has hasbeen been falling falling which which is indicative is indicative of of failingfailing financial financial health health of Indianof Indian Railways. Railways. During During the theyear year 2017 2017-18, -18,the tnheet net ` revenuerevenue surplus surplus decreased decreased by 66.10 by 66.10 per centper cent from from 4,913.00 ` 4,913.00 crore crore in 2016 in 2016-17 to-17 to ` 1,665.61` 1,665.61 crore crore in 2017 in 2017-18. -T18.he Thefactors factors mainly mainly attributable attributable to meagre to meagre surplus surplus werewere increase increase in working in working expenses expenses (8.14 (8.14 per percent cent) and) andnegative negative growth growth rate rateof of sundrysundry earnings earnings (16.20 (16.20 per centper cent). Staff). Staff cost costincluding including pension pension payments payments constituted constituted the bulkthe bulk of working of working expen expenses. ses . The Thesteadily steadily declining declining performance performance of Indian of Indian Railways Railways is reflected is reflected in the in Operating the Operating RatioRatio (OR) (OR) of 98.44 of 98.44 per percent cent which which was wasthe worstthe worst in the in lastthe lastten years.ten years. Indian Indian ` RailwaysRailways would, would, in fact, in fact, have have ended ended up with up with a negative a negative balance balance of of5,676.29 ` 5,676.29 crore crore ` insteadinstead of sur ofplus surplus of of1,665.61 ` 1,665.61 but butfor thefor advancethe advance received received from from NTPC NTPC and and IRCON.IRCON. Similarly, Similarly, OR wouldOR would have have been been 102.66 102.66 per centper cent. The Theshare share of internal of internal resources resources in total in total capital capital expenditure expenditure which which was wasas high as high as as 26.1426.14 per percent cent in 2014in 2014-15 -decreased15 decreased to 3.01to 3.01 per percent cent in 2in017 2017-18. -18.Decline Decline in in generationgeneration of internal of internal resources resources resulted resulted in greater in greater dependence dependence on Gross on Gross Budgetary Budgetary SupportSupport and andExtra Extra Budgetary Budgetary Resources. Resources. With With depleting depleting surplus, surplus, the theIndian Indian RailwaysRailways is leaning is leaning heavily heavily on Government on Government of India of India and andon EBR on EBR for meetingfor meeting its its capitalcapital expenditure. expenditure. An increasedAn increased reliance reliance on borrowingson borrowings will willfurther further exacerbate exacerbate the gravethe grave financial financial situation situation of Indian of Indian Railways Railways. AppropriationAppropriation to Depreciation to Depreciation Reserve Reserve Fund Fund (DRF) (DRF) decreased decreased significantly significantly by 68 by 68 per centper cent in 2017 in 2017-18. -Under18. Under provisioning provisioning for depreciationfor depreciation resulted resulted in piling in piling up of up of ` ‘throw‘throw forward forward’ of ’works of works estimated estimated at at1,01,194 ` 1,01,194 crore. crore. In respectIn respect of concession of concessions alloweds allowed to passengers to passengers in IR, in AuditIR, Audit observed observed that that89.7 89.7 per per centcent of the of revenuethe revenue forgone forgone towards towards concessions concessions was wason account on account of concession of concession to to i i EXECUTIVE SUMMARY Backgroundsenior citizens and Privilege Pass/PTO holders. The response to ‘Give Up’ scheme from the senior citizen passengers was not encouraging. Indian Railways (IR) is a departmental commercial undertaking of the Government of India.Audit Due alsoto mergerobserved of Railwaythat the annual Budget rate with of growththe Union in terms Budget, of number the summary of passengers and commentstravelling on inthe AC Appropriation classes in all Accounts the categ ofories IR ofare concession now includeds was in higherthe Report than that of of the Comptrollerthe non-AC and classes. AuditorSeveral General instances of India of on misuse Union ofGovernment passes and – irregularAccounts grant of of the Unionconcessions Government on medical (Financial certificates Audit). were noticed. Passenger Reservation System lacks adequate validation controls to validate age of freedom fighters and to The report focuses on financial performance of Indian Railways with reference to the previousprevent year, irregular as well multiple as the overallbooking trends on the. It same also privilegecontains pass.the results of the analysis of the impact of concessions allowed to various categories of passengers. Summary of Recommendations Summaryi. ofRailways conclusion needs s to take steps to augment their internal revenues, so that Since 2016dependence-17, railways’ on revenuegross and surplus extra budgetaryhas been falling resources which is contained.is indicative of failingii. financialRailways health may of ensure Indian that Railways. surplus During and OR the represent year 2017 a -true18, thepicture net of its revenue surplusfinancial decreased performance. by 66.10 per cent from ` 4,913.00 crore in 2016-17 to ` 1,665.61iii. Under crore provisioningin 2017-18. Tforhe depreciation factors mainly is resulting attributable in piling to meagre up of surplusthrow forward were increaseof works in working concerning expenses renewal (8.14 of per over cent aged) and assets. negative There growth is an urgentrate of need to sundry earningsaddress (16.20 this backlogper cent ).and Staff ensure cost including timely replacement pension payments and renewal constituted of old assets. the bulk of working expenses. iv. Creating new funds without any justifiable reason and thereby projecting The steadilyworking declining expenses performance and surplus of Indian in Railways a better islight reflected is not in desirable the Operating and may be Ratio (OR)avoided. of 98.44 per cent which was the worst in the last ten years. Indian Railways would, in fact, have ended up with a negative balance of ` 5,676.29 crore insteadv. of Tsurheplus Privilege of ` 1,665.61 Pass/PTO but facilitiesfor the advance provided received to their from employees NTPC and may be IRCON. Similarly,rationalised. OR would have been 102.66 per cent. The sharevi. Vofalidation internal resourcescontrols inin totalthe PRScapitalneeds expenditure to be provided which was to asensure high asgrant of 26.14 per concessionalcent in 2014 -benefit15 decreasedonly toto eligible3.01 per beneficiaries cent in 2017and-18. preventDecline misusein of generationprivilege of internal passes. resources resulted in greater dependence