‘Railways resorted to window dressing to show operating ratio in better light’: CAG
The operating ratio measures expenses as a proportion of revenue or the amount spent on every rupee earned. A higher ratio indicates poor ability to generate surplus.Updated: Sep 23, 2020, 20:31 IST
The ministry of railways took to “window dressing” for presenting its working expenses and operating ratio in a “better light”, the Comptroller and Auditor General of India (CAG) said in a report tabled in Parliament on Wednesday.
The operating ratio measures expenses as a proportion of revenue or the amount spent on every rupee earned. A higher ratio indicates poor ability to generate surplus.
In December last, the auditor had said the Railways had the worst operating ratio in the last ten years at 98.44% and its revenue surplus had decreased by more than 66% from Rs 4,913 crore in 2016-17 to Rs 1,665.61 crore in 2017-18.
Against the target of 92.8 per cent in the budget estimates, the operating of railways was 97.29 per cent in 2018-19. This meant that railways spent Rs 97.29 to earn Rs 100, the CAG noted.
“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 Net surplus in 2018-19 was Rs 3,773.86 crore. The railways 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. The Ministry of Railways (MoR) resorted to window dressing for presenting the working expenses and operating ratio in a better light,” the CAG report on railways’ finances noted.
During 2018-19, the railways generated total internal earnings of Rs 1,90,507 crore against the targeted internal earnings of Rs 2,01,090 crore, the report noted.
“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,” it added.
The national auditor also raised concerns over delays in projects over the past five years due to inefficiency of zones and weak monitoring by the railway board.
“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 report said.
The CAG also raised doubts over railways’ utilisation of its Extra Budgetary Resources (EBR) for financing projects which started from 2015-16 onward.
Scrutiny of records relating to 395 projects funded from EBR revealed that 268 projects were still in progress as on 31 March 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, the CAG noted.
“Ministry of railways resorted to Extra Budgetary Resources for project financing from 2015-16 onwards. Financial assistance of Rs 1.50 lakh crore was agreed to by Life Insurance Corporation (LIC) over a period of five years (2015-20). Audit observed that the financing arrangement with LIC materialized partially due to regulatory constraints. During 2015-19, only ` 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 a higher rate of interest,” it said.
The national auditor said there were instances of irregular utilisation to the tune of Rs 1,495 crore from EBR funds.