Railways struggling to curb huge losses, CAG suggests tariff revision
According to the report, the railways incurred a loss of Rs 26,388 crore in the last one year, though the Ministry of Railways had claimed a net surplus of Rs 1,589 crore.
NEW DELHI: Contrary to the Centre’s tall claims of Indian Railways earning profits, the Comptroller and Auditor General of India’s latest report tabled in Parliament on Tuesday showed that it has been struggling with losses. According to the report, the railways incurred a loss of Rs 26,388 crore in the last one year, though the Ministry of Railways had claimed a net surplus of Rs 1,589 crore.
Stating that the operating ratio (amount spent to earn every Rs 100) has increased from 97.29% in 2018-19 to 98.36% in 2019-20, the CAG report added that the latter figure didn’t “reflect the true financial performances of the railways” and would go up to 114.35% if actual expenditure on pension payments were take into account.
Moreover, the railways’ overall fund balance, which was Rs 10,806.68 crore in 2015-16, turned into a negative balance of Rs 25,730.65 crore in 2019-20. “Adverse fund balance was the result of more expenditure towards pension payments than the actual appropriation to the pension fund,” the CAG said.
Besides stressing on the need for railways to ensure that surplus and operating ratio reflect actual financial performance, the CAG has suggested revision of passenger and other tariffs to recover the cost of operations in a phased manner and reduce losses. It has also recommended diversification of the freight baskets to enhance earnings and tapping other sources of revenue generation.
According to the report, loss on operations of passenger and other coaching services increased from Rs 36,286.83 crore in 2015-16 to Rs 63,364.25 crore in 2019-20. “Profit from freight traffic was utilised to compensate the loss on operation of passenger and other coaching services. The loss of Rs 34,618.19 crore in passenger operations was left uncovered in 2019-20.”
Capital expenditure of railways increased by 11% even as revenue expenditure decreased by 7.3% during 2019-20, while expenditure increased from Rs 3,20,110.17 crore in 2018-19 to Rs 3,21,169.55 crore in 2019-20.