Indian Railways

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Rail Success story a sham-CAG

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Rly success story a sham: CAG

J Gopikrishnan | New Delhi

‘It window-dressed revenues, hiked freight tariff on sly’

<b>The Comptroller and Auditor General (CAG) of India has blown the lid off the Indian Railways’ fiscal turnaround story by exposing how it window-dressed revenues and enhanced freight tariff on the sly.</b>

In its report, which was recently submitted to Parliament, <b>CAG criticised the Railway Ministry for increasing freight charges months after presenting a Budget that boasted no hike. It also pulled up the Ministry for adding Tatkal and ticket cancellation collections to the total passenger revenue, saying these should have been listed separately.</b>

Though Union Railways Minister Lalu Prasad Yadav has walked away with credit for a turnaround in the Railways' fiscal health without burdening either industry or the common man, the CAG report presents a different picture.

On the ‘impressive’ increase in passenger earnings, the report observed, “An analysis of the reasons for increases in passenger earnings revealed that besides an increase of about 9 per cent in the number of passengers, the introduction of enhanced reservation fee for ticket-booking stations contributed approximately Rs 91.01 crore.”

“Other reasons for the increase in passenger earnings included realisation of Tatkal reservation charges, amounting to Rs 210.95 crore, and increasing the period of advance reservations from two months to three months, amounting to Rs 292.93 crore,” CAG observed.

Incidentally, the Tatkal and ticket cancellation charges were substantially increased in December 2005. While at the time of its introduction, the Tatkal charges were Rs 50, they have now gone up to Rs 150 for non-AC sleepers and Rs 300 for all air-conditioned coaches. Yet another reason for the increased revenue was the enhancement in cancellation charges, of which the Railways did not provide figures to the auditor.

<b>Besides passenger revenue, the Ministry enhanced freight tariff through the back door within six months of taking the credit in the Budget speech for not increasing the charges.</b>

The report stated, "Though, while presenting the Railway Budget for 2006-07, the Railway Minister had not proposed any increase in the freight rates, it was noticed in the audit that besides making upward revision in the classes of food grains and fertiliser, the Ministry of Railways (Railway Board) had increased the freight of all commodities with effect from July 1, 2006."

Giving details of increased revenue, the report said such significant increases ranged from 1.6 per cent to 3.6 per cent. "Increasing the freight charges of all commodities, the total increase in freight on this account was Rs.1193.60 crore," it observed.

The CAG report also pulled up the Ministry for its "unscientific" approach to appropriation of the Depreciation Reserve Funds. "Appropriation to DRF to meet the replacement cost of the existing assets was not made in a scientific manner, taking into account the historical cost, expected useful life and the expected residual value of the depreciated asset," the report stated. The audit also observed that Railways had failed to take into account the need for timely replacement of "over-aged assets".

The Pioneer had earlier reported that the Railways had piled up a loss of Rs 801.67 crore in just nine months due to wrong price fixation in container traffic. The report blamed the Railway Board for fixing less haulage charges for commodities from Container Corporation of India (CONCOR), a public sector undertaking of the Railways. "The fixation of haulage rates less than the base class at break-even rates has resulted in the loss of Rs 801.67 crore during the nine-month period alone," CAG stated.

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