The Ministry of Railways had resorted to ‘window dressing’ for presenting the working expense and operating ratio for 2018-19 in a better light, the CAG said in a report tabled in Parliament on Wednesday.
It also added that inefficiency of zonal railways and weak monitoring by the Railway Board led to slow progress in projects that were to be completed during 2015-20. The CAG noted that against the target of 92.8% in the Budget Estimates, the operating ratio of railways was 97.29% in FY19. This means railways spent ₹97.29 to earn ₹100. This, however, is an improvement from FY18’s 98.44%, the worst in ten years, according to an earlier CAG report.
During 2018-19, Indian Railways generated a total internal earnings of about ₹1.90 lakh crore against the targeted internal earnings of over ₹2.01 lakh crore, the CAG said, adding that the railways could not achieve even revised estimate target of about ₹1.97 lakh crore.
These earnings included freight advance of ₹8,351 crore received from NTPC and CONCOR for transportation of goods in 2019-20. If this was not included in the earnings of 2018-19, the CAG noted that the operating ratio would have been 101.77%.
“The Net Surplus in 2018-19 was ₹3,773.86 crore. Indian Railways would have ended with a negative balance of ₹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,” the CAG noted.
The CAG added that the Ministry of Railways resorted to Extra Budgetary Resources (EBR) for project financing 2015-16 onwards and financial assistance of ₹1.50 lakh crore was agreed to by Life Insurance Corporation (LIC) over a period of five years (2015-20). The audit observed that the financing arrangement with LIC materialised partially due to regulatory constraints. During 2015-19, only ₹16,200 crore could be raised from LIC, and the Ministry of Railways recouped the shortfall of ₹49,164 crore by raising funds through short-term/medium-term market borrowings which carry a higher rate of interest.
“Projects were to be completed during 2015-20. However, due to inefficiency of Zonal Railways and weak monitoring at the Railway Board level, the progress of projects was slow,” the CAG said, adding that scrutiny of records relating to 395 projects funded from EBR showed that 268 projects were still in progress as on March 31, 2019. This resulted in a blockade of ₹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. An amount of ₹15,922 crore was incurred from EBR towards 79 unremunerative projects. The criteria for exclusion of projects pending land acquisition etc. was not followed. 111 such projects were funded from EBR. None of these were completed as on March 31, 2019. There were instances of irregular utilisation to the tune of ₹1,495 crore from EBR funds,” it added.
In a separate report, the CAG pointed out that the requirement of locos was not decided on the basis of actual need and there was no structured methodology for assessing the requirement, leading to more number of diesel locos in the system than required.
The railways, it said, was holding and maintaining locos much more than the homing capacity or the installed capacity to repair a specified number of locos allotted to a loco shed during a financial year.
“Excess holding adversely impacted the quality of loco maintenance. Lack of quality control, use of inferior material, poor supervision and inadequate internal control occurred during scheduled maintenance of locos in loco sheds. Audit noticed unscheduled repairs of 17,530 diesel and 22,078 electric locos during 2012-17,” CAG said.
It added that on account of defective material in manufacturing and the like, 46% new locos failed within 100 days of their commissioning.