Report No.1 of 2018 - Finance Audit On Railways Finances in Indian Railways Union Government

Report of the
Comptroller and Auditor General

of India
For the year ended March 2017
Laid in Lok Sabha/Rajya Sabha on ______________
Union Government (Railways)

Railways Finances
Report No. 1 of 2018
Table of Contents
Particulars Paragraph Pages
Preface
List of Abbreviations
Executive Summary (i) – (v)
CHAPTER 1 – State of Finances
Summary of Current Year’s Fiscal Transactions 1.1 1
Fiscal Transactions in 2016-17-An overview 1.2 2
Resources of IR 1.3 4
Unrealized Earnings 1.4 10
Cross-Subsidization 1.5 10
Application of Resources 1.6 13
Revenue Surplus 1.7 16
Efficiency Indices 1.8 16
Plan Expenditure 1.9 18
Railway Funds 1.10 20
Comments on Accounts 1.11 24
Conclusion 1.12 27
Recommendations 1.13 28
CHAPTER 2 – Appropriation Accounts
Summary of Appropriation Accounts 2.1 29
Financial Accountability and Budget Management 2.2 34
Capital Grant No. 16 – Assets, Acquisition, 2.3 36

Construction and Replacement
Misclassification of Expenditure 2.4 39
Irregular Re-appropriation of Funds 2.5 42

Unsanctioned Expenditure 2.6 42
Conclusion 2.7 43
CHAPTER 3- Accounting of Assets in Indian Railways
Audit Findings 45
Block Account 3.1 45
Exhibition of Assets in Balance Sheet 3.2 49
Maintenance of Records 3.3 50
Acquisition of Rolling Stocks through Indian

3.4 52
Railway Finance Corporation
Accounting and disclosure of EBR (IF) funded

3.5 55
projects
Accounting of Rail Vikas Nigam Limited (RVNL)

3.6 55
Projects
Depreciation policy of IR 3.7 56
Accounting Reforms in IR 3.8 58
Conclusion 3.9 59
Glossary of Terms 61-63
Appendix 64-67
PREFACE
This Report has been prepared for submission to the President of India under
Article 151 of Constitution of India.
Chapters 1 and 2 of the Report contain audit observations on matters arising

from examination of Finance Accounts and Appropriation Accounts respectively
of Indian Railways for the year ended 31 March 2017.
Chapter 3 of the Report contains audit observations on accounting of assets,

maintenance of assets records, depreciation of assets, disclosure of assets taken
on lease, accounting of assets condemned, disclosure of assets created through
extra budgetary resources in Indian Railways.
List of Abbreviations used in the Report
Unit Expansion of the abbreviation
CR Central Railway
ER Eastern Railway
ECR East Central Railway
ECoR East Coast Railway
NR Northern Railway
NCR North Central Railway
NER North Eastern Railway
NEFR North East Frontier Railway
NWR North Western Railway
SECR South East Central Railway
SCR South Central Railway
SER South Eastern Railway
SR Southern Railway
SWR South Western Railway
WR Western Railway
WCR West Central Railway
Metro Metro Railway Kolkata

EXECUTIVE SUMMARY
Background
Indian Railways (IR) is a departmental commercial undertaking of the Government
of India. It consists of 67,368 route kms on which 22,550 trains ply, carrying about
22.24 million passengers and hauling nearly 3.04 million tonne of freight every
day. Policy formulation and overall control of the Railways are vested in Railway
Board comprising of the Chairman, Financial Commissioner and other functional
Members. The IR system is managed through 17 zones having 68 operating
divisions. Apart from the zonal railways representing the operational part of the
system, there are eight production units engaged in manufacturing of rolling stock
and other related items.
From 1 April 1950, a separate Railway Budget is being presented to the Parliament
prior to presentation of the General Budget every year. Till the year 2016-17 the
Railway Budget was presented to the Parliament separately and figures relating to
the receipts and expenditure of IR were shown in the General Budget, as Railway
Budget formed part of the total budget of the Government of India. However,
Government has decided to merge Railway Budget with the Union Budget from
Budget Year 2017-18 onwards.
Summary of Conclusions
Report of the Comptroller and Auditor General of India-Union Government
(Railways) for the year ended 31 March 2016 (Report No.37of 2016) highlighted
that during 2015-16, total revenue receipts increased by 4.57 per cent which was
significantly below the Compound Annual Growth Rate (CAGR) of 14.86 per cent
during the period 2011-15. The growth of freight earnings was 3.23 per cent in
2015-16 which was below the CAGR of 15.01 per cent registered during 2011-15.
The growth of passenger earnings was 4.96 per cent in 2015-16 which was also
below the CAGR of 14.31 per cent registered during 2011-15. Net surplus after
meeting dividend liability was `10,505.97 crore in 2015-16. The Operating Ratio
improved to 90.49 per cent in 2015-16 from 91.25 per cent in 2014-15.
During 2016-17, the total revenue receipts of ` 1,65,382.49 crore decreased by 1.78
per cent as compared to total revenue receipts of ` 1,68,379.60 crore during 2015-
16. This was significantly below CAGR of 10.09 per cent during the period 2012-
16.
The freight earnings of ` 1,04,338.54 crore decreased by 4.46 per cent in 2016-17
as compared to ` 1,09,207.66 crore during 2015-16. The growth in freight earnings
was negative as compared to previous years’ growth of 3.23 per cent. This was

Route-kilometre-The distance between two points on the railway irrespective of the number of
lines connecting them viz., single line, double line, etc. Statistical data of route kms., no. of trains,
no. of passengers and freight loading mentioned above are provisional.
i
also below the CAGR of 8.60 per cent registered during 2012-16. The freight
loading (in absolute terms) increased from 1008.09 Million Tonne (2012-13) to
1106.15 Million Tonne during 2016-17. Increase in freight loading by 0.42 per
cent during 2016-17 as compared to freight loading of 2015-16 was less than the
CAGR of 3.00 per cent achieved during 2012-16. The Net Tonne Kilometre
(NTKM) in respect of revenue freight traffic of 620175 million NTKM in 2016-17
decreased by 5.24 per cent as compared to 654481 NTKM during 2015-16.
The passenger earnings of ` 46,280.46 crore increased by 4.51 per cent in 2016-
17 as compared to ` 44,283.26 crore during 2015-16. This was below the CAGR
of 12.23 per cent registered during 2012-16.
Total Working Expenditure during 2016-17 was ` 1,59,029.61 crore as compared
to ` 1,47,835.93 crore during 2015-16.
Net surplus after meeting all revenue liabilities stood at ` 4,913.00 crore in 2016-
17 as against ` 10,505.97 crore in 2015-16, even though no dividend was paid
during 2016-17 as compared to ` 8,722.51 crore dividend paid during 2015-16. It
was observed that in respect of Zonal Railways, the actual amount required to meet
the expenditure on pension payments was ` 40,025.95 crore during the year.
However, ` 35,000 crore (against the Budget Provision of ` 42,500 crore) was
appropriated to Pension Fund. Thus, there was under provisioning of ` 5,025.95
crore under the Pension Fund, thereby understating the total working expenditure
to that extent. Had the actual amount (` 40,025.95 crore) required to meet the
expenditure on pension payments been appropriated, there would have been a
negative balance of ` 112.95 crore (instead of surplus of ` 4,913 crore) leaving no
surplus available for appropriation to the funds (DF, CF and Debt Service Fund).
The Operating Ratio represents the percentage of working expenses to traffic
earnings and is an indicator of the efficiency in operations of IR. The Operating
Ratio was 90.49 per cent in 2015-16, it deteriorated to 96.50 per cent in 2016-17.
The Operating Ratio during the current year had deteriorated to an all-time low
since 2000-01 when it was 98.34 per cent. Had the actual amount ` 40,025.95 crore
required to meet the expenditure on pension payments of Zonal Railways been
appropriated to the Pension Fund (instead of ` 35,000 crore), the total gross
working expenditure of IR would have increased (by ` 5,025.95 crore to
` 1,64,537.93 crore and the Operating Ratio would work out to 99.54 per cent.
Thus Operating Ratio of 96.50 per cent does not reflect the true financial
performance of the Railways.
Total Capital Expenditure (including expenditure under PPP) during 2016-17 was
` 1,08,290.14 crore as compared to ` 93,519.79 crore during 2015-16.
Railway funds closed at ` 2,576.81 crore at the end of 2016-17 (Railway Safety
Fund ` 23.26 crore, Development Fund ` 402.63 crore, Pension Fund ` 594.76
crore, Debt Service Fund ` 800.23, Depreciation Reserve Fund ` 450.50 crore and
Capital Fund ` 305.43 crore) against the fund balance of ` 10,806.68 crore in 2015-
16 registering a decrease of ` 8229.87 crore. The decrease in fund balances was
ii
mainly due to more expenditure from Pension Fund, Capital Fund and Debt Service
Fund in comparison to amount credited in the funds during the year. Non-crediting
of interest was also one of the reasons for decrease in funds balances. Further, the
contribution to the DRF was not made as per requirement despite there being a
huge backlog of over aged assets amounting to ` 47,679 crore in the railway system
required to be replaced for safe running of trains.
Indian Railways was unable to meet its operational cost of passenger and other
coaching services. During 2015-16, there was a loss of ` 36,286.33 crore on
passenger and other coaching services. The freight services earned a profit of
` 42,426.63 crore which indicated that 85.53 per cent of the profit from freight
traffic was utilized to compensate the loss on operation of passenger and other
coaching services. The above issues have regularly been highlighted in the
preceding Reports of Comptroller and Auditor General of India - Union
Government (Railways) - Railways Finances.
IR is authorized for expenditure through operation of 16 Grants comprising of 15
Revenue Grants (Grants number 1 to 15) and one Capital Grant (Grant No. 16).
There were savings of 13.15 per cent (` 31,927.91 crore) under revenue grants and
savings of 4.97 per cent (` 5,926.31 crore) under capital grant against the
sanctioned provisions available in 2016-17. However, the savings of
` 31,927.91 crore under revenue grants were only notional and reflect over
provisioning disregarding the realistic flow of revenue.
Railways incurred excess expenditure of ` 33.13 crore (Voted ` 22.42 crore and
Charged ` 10.71 crore) during the year 2016-17. The excess expenditure does not
augur well for fiscal prudence besides undermining Parliamentary control. The
excesses over the budgetary sanction require regularization by Parliament under
Article 115 (1) of the Constitution of India.
Misclassification of expenditure from one revenue grant to another and also from
revenue to capital grant and vice-versa and cases of misclassification of
expenditure from Voted and Charged were also identified in audit. Some instances
of such misclassification of expenditure have been given in the report. The Public
Accounts Committee in its various reports has expressed serious concern over large
number of misclassification occurring in the Accounts of Railways and despite
repeated assurances given by the Ministry of Railways in their Action Taken Notes
that necessary remedial measures have been taken to ensure that misclassification
is curbed, numerous instances of misclassification are still being noticed by Audit.
Indian Railways, as a departmental commercial undertaking, though prepares
Balance Sheet and Profit and Loss Account besides Block Account, does not
disclose the significant accounting policies which form the basis of preparation of
financial statements like accounting of fixed assets, depreciation, valuation of
investments etc. The key information viz. capital works-in-progress, depreciated
value of assets, investments in property, plant and machinery etc. are either absent
or cannot be recognized easily from the financial statements.
iii
The major source of assets creation in Indian Railways was Gross Budgetary
Support (59.07 per cent) followed by Deprecation Reserve Fund (14.15 per cent)
and Capital Fund (11.69 per cent) of the total assets created.
Fixed Assets such as buildings, track structures etc. are not separately depicted in
the Block Account. For maintaining transparency in the Accounts and disclosing
the correct picture of all the fixed assets, the existing format of Block Account
needs revision. The formats of Block Account and Balance Sheet have not been
revised to distinctly exhibit the capital works-in-progress in Block Account,
exhibition of the investments in the Balance Sheet etc.
Audit observed that no disclosure for the assets (rolling stocks) acquired through
funding from Indian Railway Finance Corporation and projects executed under
Extra Budgetary Resources (Institutional Finance) were made in the Block
Accounts and Balance Sheets of the Zonal Railways and IR as well. Assets
Registers, Land and Building Registers etc. were either not maintained in the Zonal
Railways and Production Units or maintained but not updated to reflect the true
value of assets created.
IR does not follow the system of disclosing the significant accounting policies
which should form the basis of preparation of any Financial Statement such as
Accounting of Fixed assets, Depreciation and provision of liability for pension etc.
Balance Sheet of IR depicts Block Assets at their original cost and not at
depreciated value. It is, however, reduced from its account at the time of
replacement/renewal or condemnation without replacement. Thus, the value of
block assets as depicted in the Balance Sheet did not represent the true written
down value of the assets.
The system in vogue in IR is to set apart an adhoc sum towards contribution to
DRF by charging off to the working expenses. The present policy results in under
provisioning of depreciation and inadequate maintenance/replacement of assets.
Existing policy of depreciation gives leverage to IR to manage Net revenue surplus
at a desired level.
Recommendations
Recommendations on various aspects of Railways Finances are given below:
¾ The Operating Ratio during 2016-17 had deteriorated to the lowest level of
96.50 per cent since 2000-01 when it was 98.34 per cent. When actual
expenditure on pension payments is taken into account, the Operating
Ratio works out to 99.54 per cent. Since, Operating Ratio is a direct
indicator of the working of Railways; the Ministry of Railways should also
look into the various innovative ways for revenue generation and closely
monitor the expenditure.
¾ Ministry of Railways needs to revisit the passenger and other coaching
tariffs so as to recover the cost of operations in a phased manner and
reduce its losses in its core activities. The fixation of passenger fare and
freight charges should be based on the cost involved so that it brings both
iv
rationality and flexibility in pricing considering the financial health of
Railways and the current market scenario. There is hardly any justification
for not fully recovering the cost of passenger services in case of AC 1stClass,
First Class and AC 2-Tier. However, since one of the factors for non-
recovering full cost from these classes could be issue of free and
concessional fare passes/ tickets to various beneficiaries in good numbers,
this practice needs to be scaled down.
¾ Non-availability of sufficient funds in Depreciation Reserve Fund to
replace the over aged assets is indicative of weak financial health of Indian
Railways. The huge backlog of renewal and replacement of over aged
assets in railway system needs to be addressed for safe running of trains.
¾ Total Capital grew from ` 1,83,488 crore as on 31 March 2013 to
` 3,12,635 crore as on 31 March 2017, total traffic handled declined from
7,27,610 million Net Tonne Kilometres to 7,01,813 million Net Tonne
Kilometres respectively. Railways need to take measures to improve
competitiveness of its services vis-à-vis Road and Air travel.
¾ Allocation should be realistic and on conservative side keeping in view the
realistic assessment of revenue streams.
¾ Ministry of Railways should impress upon the budget controlling
authorities for regular monitoring of expenditure.
¾ Internal control mechanism should be strengthened to reduce the instances
of misclassification of expenditure.
¾ The unsanctioned expenditure should be controlled; administration should
ensure all unsanctioned expenditure is regularised on priority.
¾ Indian Railways needs to ensure that Block Accounts and Balance Sheets
of Zonal Railways and Production Units reflect the true value of the assets
duly supported by Assets Registers. Preparation of Assets Registers should
be made mandatory for each Zonal Railways and Production Units.
¾ Indian Railways should follow the system of disclosing the significant
accounting policies forming the basis of preparation of financial
statements such as accounting of fixed assets, depreciation, investments
etc.
¾ Ministry of Railways needs to make provision for depreciation in a more
scientific method by adopting relevant accounting policies.
v
Chapter
Chapter11State
StateofofFinances
Finances

Chapter 1 State of Finances

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1.1 Summary of Current Year’s Fiscal Transactions

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(` in crore)
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2Other coaching earnings from transportation of parcels, luggage and post office mail etc.
3
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sidings and level crossing, re-imbursement of loss on strategic lines etc.
4 Gross Traffic Receipts-Operational receipts from freight, passenger, other coaching traffic and sundry
earnings of IR.
5Operating expenses of IR.
Report No. 1 of 2018 Page 1

Chapter
Chapter11State
StateofofFinances
Finances


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1.2 Fiscal Transactions in 2016-17-An overview

1.2.1 Gross Traffic Receipts (GTR)
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ReportNo.
Report No.11ofof2018
2018 Page
Page33
Chapter11State
Chapter StateofofFinances
Finances
1.3 Resources of IR
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Chapter1 1State
Finances

Figure 1.2: Relative Share of various Resources of IR
Average Receipts 2011-16 Receipts 2016-17

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Note: Other Revenue Earnings include Other Coaching Earnings, Sundry Other Earnings, Suspense and
Miscellaneous Receipts
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1.3.1 Revenue Receipts
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Figure 1.3: Revenue Receipts during 2012-13 to 2016-17
161017.25 168379.60 165382.49
143213.87
126180.43

` in crore

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Note: Others include Other Coaching, Sundry Others, Suspense and Miscellaneous Receipts
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Report
Report No.No. 1 of
1 of 2018
2018 Page55
Page
Chapter 11State
Finances
1.3.1.1 Freight Earnings

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Figure 1.4: Annual Rate of Growth of Freight Earnings and Freight Loading

Percentage

2012-13 2013-14 2014-15 2015-16 2016-17

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Table 1.2 Freight Services Statistics
Year Loading NTKM11 Earnings Average lead Rate per
(Million (in million) (` in crore) ( in tonne per km
Tonne) (Revenue kilometre) (in paise)
Freight Traffic
only)

Source- Indian Railways Annual Statistical Statements (Statement No.13-Goods Revenue Statistics)
Note: (i) Figures in bracket represent percentage increase over previous year.
(ii)Figures of 2016-17 (except Earnings) are provisional.
11
NTKM-Net Tonne Kilometre-Unit of measure of freight traffic which represent the transport of one tonne
goods (including the weight of any packing but excluding the weight of the vehicle used for transport) over
a distance of one kilometre.

Chapter

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Figure 1.5: Major Commodity wise share of loading and earnings (2016-17)

Percentage

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Chapter 1 State
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1.3.1.2 Passenger Earnings

.H\SHUIRUPDQFHLQGLFDWRUVRISDVVHQJHUVHUYLFHVDUHWDEXODWHGLQ7DEOH
Table 1.3 Passenger Services Statistics
Year No. of Passenger (in millions) Passenger Earnings Average Average
Non- Suburban Total Kilometre (` in lead earnings per
suburban (in crore) (in passenger per
million) kilometre) kilometre
(in paise)

Source-Indian Railways Annual Statistical Statements (Statement No.12-Passenger Revenue Statistics
Note: (i) Figures in bracket represent percentage increase over previous year.
(ii) Figures for 2015-16 (except No. of Passengers and Earnings) are revised figures.
(iii)Figures for 2016-17 (except Earnings) are provisional.
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Chapter
Chapter 11 State
State of
of Finances
Finances
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Figure 1.6: Growth Rate of Passenger Originating and Passenger Earnings

Percentage

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1.3.1.3 Sundry Earnings and Other Coaching Earnings
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Asper Summary of End Results Coaching Services Profitability/Unit Costs prepared by Ministry of
Railways

Chapter
Chapter11State
StateofofFinances
Finances

1.4 Unrealized Earnings13
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Table 1.4-Outstanding dues against State Electricity Board
(`` in crore)
Sl. State Electricity Board / Outstanding Outstanding Increase
No. Power House dues as of dues as of (+)/decrease (-)
31 March 2016 31 March during the
2017 year
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Source-Statement of dues recoverable from State Electricity Board/Power Houses
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1.5 Cross-Subsidization
1.5.1 Subsidy towards Passenger and other Coaching Services
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13
Unrealized earnings on account of movement of traffic was classified as ‘Traffic Suspense’ whereas on
account of rent/lease of building/land and maintenance charges of sidings etc. as ‘Demand Recoverable’.
14Summary of End Results-Coaching Services-Profitability/Unit Costs for 2016-17 not compiled (December
2017).

Chapter
Chapter11 State
State of
of Finances
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Figure 1.7 (a): Losses on Passenger and other Coaching Services

(2011-12 to 2015-16)

` in crore

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Figure 1.7(b): Percentage of expenditure on Passenger and Other
Coaching Services left uncovered

Percentage

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Chapter Finances
Figure 1.8: Percentage of profit on freight earnings used to subsidize the

passenger and other coaching services
120

100

80
Percentage
60
40
20
0
2011-12 2012-13 2013-14 2014-15 2015-16
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1.5.2 Operational losses of various Classes of Passenger Services
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Table 1.5 Operational losses of various Classes of Passenger Services
(` in crore)
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Source-Summary of the End Results Coaching Services Profitability/Unit Costs
Note-1.Negative figures denote losses and positive figures denote profits on passenger services.
2. Figures in bracket represent percentage loss/profit.

Chapter 11 State
Chapter State of Finances
Finances
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Figure 1.9: Plan and Revenue Expenditure in the last five years

` in crore

5HYHQXH([SHQGLWXUH 3ODQ([SHQGLWXUH 7RWDO([SHQGLWXUH
*Excluding amount of surplus appropriated to Development Fund, Capital Fund and Debt Service Fund
(2012-13 - ` 8,266.25 crore, 2013-14 - ` 3,740.40 crore, 2014-15 – ` 7,664.94 crore, 2015-16 – ` 10,505.97
crore and 2016-17 ` 4, 913.00 crore).
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15Lossworked out on the basis of figures of Expenses and Earnings given in Summary of the End Results-
Coaching Services Profitability/Unit Costs (2015-16).

Chapter
Chapter 11 State
State of
ofFinances
Finances

1.6.1 Revenue Expenditure

Figure 1.10: Share of Revenue Expenditure in last five years
Average Share of Revenue Share of Revenue Expenditure
Expenditure 2016-17
2011-12 to 2015-16

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Figure: 1.11 – Growth of Ordinary Working Expenses (2012-13 to 2016-17)

`in crore

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Report
ReportNo.
No.11of
of2018
2018 Page14
Page 14
Chapter 11 State
State of
ofFinances
Finances
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Figure: 1.12-Component wise expenditure

` in crore

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Note-(i) Figures for 2016-17 are as per Budget Estimate.

(ii)Figures for 2015-16 are revised figures (based on actuals).
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1.6.2 Committed Expenditure
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Figure 1.13: Committed Expenditure as a percentage of Total Revenue Expenditure

Percentage

Note- (i) Figures shown in bracket indicate Total Committed Expenditure in crore of rupees.
(ii)Figures for 2016-17 are as per Budget Estimate.
(iii)Figures of 2015-16 are revised figures (based on actuals).
(iv) Committed Expenditure included dividend payment to general revenue for the year
upto 2015-16
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centLQ,5ZDVOHIWZLWKper centRIWKHWRWDOUHYHQXHH[SHQGLWXUH
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Chapter
Chapter1 1State
Stateofof
Finances
Finances
1.7 Revenue Surplus

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Figure: 1.14 Revenue Surplus

` in crore

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cent JURZWK UDWH LQ QHJDWLYH JURZWK UDWH RI per cent RI
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1.8 Efficiency Indices
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1.8.1 Operating Ratio

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UDWH per cent$XGLWREVHUYHGWKDWWKH2SHUDWLQJ5DWLRGXULQJWKH FXUUHQW
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Chapter
Chapter11State
Stateof
of Finances
Finances
Table 1.6 Operating Ratio of Zonal Railways

(In percent)
S. No. Zonal Railway 2012-13 2013-14 2014-15 2015-16 2016-17
&HQWUDO

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6RXWK:HVWHUQ
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0HWUR5DLOZD\.RONDWD
2YHUDOO,5
Source-Indian Railways Appropriation Accounts-Part-I Review
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ZKHUHDVWKHVDPHGHWHULRUDWHGLQRWKHU]RQDOUDLOZD\VGXULQJWKHFXUUHQW\HDUDV
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OHVV WKDQ per cent GXULQJ 25 RI &HQWUDO (DVWHUQ (DVW &HQWUDO
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Taking into account the actual amount of ` 40,025.95 crore required to be
appropriated to the Pension Fund (instead of ` 35,000 crore), the working
expenses of IR would have increased by ` 5,025.95 crore to ` 1, 64,537.93 crore
instead of ` 1,59,511.9816 crore. Hence, OR of IR would have been at 99.54 per
cent* instead of 96.50 per cent as mentioned above. Thus, the OR of 96.50 per
cent does not reflect the true financial performance of the Railways.
* Operating Ratio = Total Gross Working Expenses/ Total Gross Earnings x 100
i.e. ` 1,64,537.93 crore/ ` 1,65,299.0417 crore x 100 = 99.54 per cent.

Total Working Expenditure (` 1,59,029.61 crore) less Suspense (` -482.37 crore) = Total Gross Working
Expenses (` 1,59,511.98 crore)
17 Gross Traffic Receipts (` 1,65,292.20 crore) less Traffic Suspense (` - 6.84 crore) = Total Gross Earnings
(` 1,65,299.04 crore).

Chapter
Chapter1 State of Finances
1 State of Finances

1.8.2 Capital Output Ratio (COR)
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3.0VLVFRQVLGHUHGDVWKHRXWSXWLQWKHFDVHRI,5
&25RI,5GXULQJWKHODVWILYH\HDUVHQGHGRQ0DUFKLVVKRZQLQWKH7DEOH

Table 1.7 Capital Output Ratio of IR
As on Total Capital Goods Traffic Passenger Traffic Total Capital
including (NTKM) Traffic at
investment (in Million) Passenger Million (in charge
from Capital (Revenue Kilometres NTKMs Million (in
Fund Freight (in NTKMs) Paise)
(` in Million) Traffic only) Millions) per
NTKM
0DUFK
0DUFK
0DUFK
0DUFK
0DUFK
Source-Indian Railways Annual Statistical Statements
Note: Figures for the period as on 31 March 2016 are revised figures. Figures for 2016-17 except Capital
including Investments from Capital Fund are provisional.
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,WFRQWLQXRXVO\LQFUHDVHGGXULQJODVWILYH\HDUV
1.8.3 Staff Productivity
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centIURPWRRI2SHQ/LQHVWDIIRIDOO]RQDOUDLOZD\V
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ZHLJKWRIYHKLFOHRYHUDGLVWDQFHRIRQHNLORPHWHU
=RQHZLVHDQDO\VLVRIVWDIISURGXFWLYLW\UHYHDOHGWKDWGXULQJKLJKHVW6WDII
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6WDII3URGXFWLYLW\ RI 0LOOLRQ 17.0RI(DVWHUQ 5DLOZD\ ZDV WKH ORZHVW
GXULQJWKHVDPHSHULRG
1.9 Plan Expenditure
,5 SOD\V D FUXFLDO UROH LQ DXJPHQWLQJ LQIUDVWUXFWXUH IRU VXVWDLQDEOH HFRQRPLF
JURZWK 7RNHHS SDFH ZLWK WKHWUDQVSRUW VHFWRULQ JHQHUDO DQG WR UHVSRQG WR WKH
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18Annual Statistical Statements of Indian Railways

Chapter State of
Finances
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EXGJHWDU\ VXSSRUW LH PDUNHW ERUURZLQJ WKURXJK ,QGLDQ 5DLOZD\ )LQDQFH
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7KH7DEOHJLYHVWKHVRXUFHVRIIXQGVIRUWKHSODQH[SHQGLWXUHGXULQJWKHWK
)LYH\HDU3ODQWR
Table 1.8 Sources of Plan Expenditure
(` in crore)
Source of Plan 12thFive Year Plan
Expenditure 2012-13 2013-14 2014-15 2015-16 2016-17
Actual Actual Actual Actual Budget Actual*
Estimates
*URVV%XGJHWDU\
6XSSRUW
,QWHUQDO5HVRXUFHV

7RWDO *%6 DQG 35,241.52 38,764.38 47,674.84 54,453.78 61,675.00 55,711.48
,QWHUQDO5HVRXUFHV (69.95) (71.80) (81.19) (58.23) (50.97) (51.45)
([WUD%XGJHWDU\
5HVRXUFHV
,5)&591/
(%5,)333
*UDQG7RWDO 50,383.45 53,989.26 58,718.94 93,519.79 121,000.00 1,08,290.14
*Details are given in Para 1.1 (a) and in Para 2.1.
Note: Figures in brackets represent percentage to the total Plan expenditure
Source-Explanatory Memorandum on Railway Budgets and Appropriation Accounts
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WRper centLQ7KHVKDUHRILQWHUQDOUHVRXUFHVWRWRWDOSODQ
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` FURUH7KXVWKHUHZDVDQXQVSHQWDPRXQWRI` FURUHXQGHU
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19Reserve Funds such as Depreciation Reserve Fund, Capital Fund, Development Fund

Extra Budgetary Resources (Institutional Finance)-EBR (IF) was introduced in Railways in 2015-16
21
Includes expenditure from Railway Safety Fund
Report
Report No.
No. 11 of
of 2018
2018 Page19
Page 19
Chapter
Chapter 1 State
State of
of Finances
Finances

Table 1.9 Category-wise Plan Expenditure

(` in crore)
Plan Heads
12th Five Year Plan
2012-13 2013-14 2014-15 2015-16 2016-17
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*Excluding expenditure of ` 26,834.09 crore under PPP.
Source-Indian Railways Appropriation Accounts-Grant No.16 and Statement No.10-Statement of Expenditure on
Capital Account.
Note: 1 Figures in brackets represent percentage to the total plan expenditure.
Note: 2 Others include Road Safety Works, Electrification Projects, Computerization, other Electric Works, Railway
Research, Other Specified Works, Stores Suspense, Manufacturing Suspense, Miscellaneous Advance, Staff
Quarters, Passenger Amenities, Metropolitan Projects.
Note: 3 The above Plan expenditure excludes an amount of ` 26,834.09 crore under PPP mode under Plan Heads
viz New Lines, Traffic facilities, Rolling stock, Road Safety Works (Road Over/Under Bridge), Investment in
PSUs etc.
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&RPSRQHQWRI/HDVHFKDUJHVDOVRPDLQWDLQHGSRVLWLYHJURZWKGXULQJDQG

1.10 Railway Funds
Depreciation Reserve Fund (DRF) - )RUUHSODFHPHQWDQGUHQHZDORIDVVHWVWKH
5DLOZD\V PDLQWDLQ '5) ILQDQFHG E\ WUDQVIHU IURP UHYHQXH LQ FDVH RI =RQDO
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3URGXFWLRQ8QLWV
Pension Fund - 7KHIXQGLVFUHDWHGWRFRYHUWKHFXUUHQWSHQVLRQSD\PHQWVDVDOVR
WR PHHW WKHDFFXPXODWHGOLDELOLW\RQDFFRXQW RI SHQVLRQEHQHILWV HDUQHG LQ HDFK
\HDURIVHUYLFH7KHIXQGLV ILQDQFHGE\WUDQVIHUIURP UHYHQXHLQ FDVHRI=RQDO
5DLOZD\V DQG E\ WUDQVIHU IURP :RUNVKRS 0DQXIDFWXUH 6XVSHQVH LQ FDVH RI
3URGXFWLRQ8QLWV
Development Fund (DF) - 7KHIXQGLVILQDQFHGE\DSSURSULDWLRQIURPµ6XUSOXV¶
7KHIXQGLVXWLOLVHGWRPHHWH[SHQGLWXUHIRUZRUNVUHODWLQJWRDPHQLWLHVIRUXVHUV
RI UDLOZD\ WUDQVSRUW ODERXU ZHOIDUH ZRUNV XQUHPXQHUDWLYH RSHUDWLRQDO
LPSURYHPHQWZRUNVDQGVDIHW\ZRUNV
ReportNo.
2018 Page
Page20
20
Chapter 11 State
Chapter State of
of Finances
Finances
Capital Fund (CF) - 7KHIXQGKDVEHHQFUHDWHGIURPZLWKWKHH[SUHVV

SXUSRVH RI ILQDQFLQJ SDUW RI WKH UHTXLUHPHQW IRU ZRUNV RI FDSLWDO QDWXUH $IWHU
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Debt Service Fund (DSF) - 7KHIXQGKDVEHHQFUHDWHGIURPZLWKWKH
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IURP µ6XUSOXV¶ DIWHU PHHWLQJ WKH GLYLGHQG OLDELOLW\ DQG PHHWLQJ PDQGDWRU\
UHTXLUHPHQWRI&)DQG')
Railway Safety Fund (RSF) - 7KLVIXQGKDVEHHQFUHDWHGIURP$SULOIRU
ILQDQFLQJ ZRUNV UHODWLQJ WR FRQYHUVLRQ RI XQPDQQHG OHYHO FURVVLQJV DQG IRU
FRQVWUXFWLRQ RI URDG RYHUXQGHU EULGJHV DW EXV\ OHYHO FURVVLQJV +RZHYHU WKH
VFRSHRIWKLVIXQGKDVEHHQHQODUJHGLQWRDOVRFRYHU1HZ/LQHV*DXJH
&RQYHUVLRQ(OHFWULILFDWLRQDQG6DIHW\ZRUNV7KHIXQGLVILQDQFHGWKURXJKWUDQVIHU
RIIXQGE\WKHFHQWUDOJRYHUQPHQWIURPWKH&HQWUDO5RDG)XQGRXWRIGLHVHOFHVV
DVZHOODVWKHFRQWULEXWLRQWKDWZDVEHLQJPDGHWRWKH5DLOZD\6DIHW\:RUNV)XQG
RXWRIWKHGLYLGHQGEHLQJSDLGE\WKH0R5WRWKH*HQHUDO5HYHQXHV$SDUWIURP
WKLV DPRXQW FDQ DOVR EH DSSURSULDWHG RXW RI UDLOZD\ UHYHQXHV LH RXW RI WKH
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7KHVWDWXVRIYDULRXV)XQGVGXULQJLVVKRZQLQ7DEOH
Table 1.10 Fund Balances
(` in crore)
Name of Fund Opening Accretion Withdrawal Closing
Balance during the year during the year Balance
'5)
3HQVLRQ)XQG
'HYHORSPHQW)XQG
&DSLWDO)XQG
5DLOZD\6DIHW\)XQG
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Note- 1. Accretion includes financial adjustments, appropriation to fund and interest received
on fund balances during the year.
2. Accretion under DRF, Development Fund and Railway Safety Fund includes financial
adjustments of ` (-) 0.27 crore, ` (-) 4.93 crore and ` 7.74 crore respectively.

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` FURUHDQG` FURUHUHVSHFWLYHO\ (Appendix-1)

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ReportNo.
2018 Page
Page21
21
Chapter
Finances
Figure 1.15-Trend of Fund Balances (2012-13 to 2016-17)

` in crore

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KDVEHHQSRLQWHGRXWLQDXGLWKRZHYHUQRUHSO\KDVEHHQUHFHLYHGIURP0R5
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Figure 1.16-Fund Balances at the close of the years (2012-13 to 2016-17)

` in crore

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5HVHUYH)XQG )XQG )XQG )XQG

Source-Indian Railways Appropriation Accounts Part-II-Detailed Appropriation Accounts
ReportNo.
2018 Page
Page22
22
Chapter
Finances
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� Mismatch
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Units.Units.
Report
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No. 1No.
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1 of 2018 PagePage
24 24
Chapter11State
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Chapter
Chapter 11 State
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1.12 Conclusion
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Chapter11State
Chapter Stateof
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� The Operating Ratio during 2016-17 had deteriorated to the lowest level of
96.50 per cent since 2000-01 when it was 98.34 per cent. When actual
expenditure on pension payments is taken into account, the OR works out
to 99.54 per cent. Since, Operating Ratio is a direct indicator of the working
of Railways; the Ministry of Railways should also look into the various
innovative ways for revenue generation and closely monitor the
expenditure.
� Ministry of Railways needs to revisit the passenger and other coaching
tariffs so as to recover the cost of operations in a phased manner and
reduce its losses in its core activities. The fixation of passenger fare and
freight charges should be based on the cost involved so that it brings both
rationality and flexibility in pricing considering the financial health of
Railways and the current market scenario. There is hardly any justification
for not fully recovering the cost of passenger services in case of AC 1st
Class, First Class and AC 2-Tier. However, since one of the factors for
non- recovering full cost from these classes could be issue of free and
concessional fare passes/ tickets to various beneficiaries in good numbers,
this practice needs to be scaled down.
� Non-availability of sufficient funds in Depreciation Reserve Fund to

replace the over aged assets is indicative of weak financial health of Indian
Railways. The huge backlog of renewal and replacement of over aged
assets in railway system needs to be addressed for safe running of trains.
� Total Capital grew from ` 1,83,488 crore as on 31 March 2013 to
` 3,12, 635 crore as on 31 March 2017, total traffic handled declined from
7,27,610 million Net Tonne Kilometres to 7,01,813 million Net Tonne
Kilometres respectively. Railways need to take measures to improve
competitiveness of its services vis-à-vis Road and Air travel.
Report No. 11 of
Report No. of 2018
2018 Page 28
Page 28
Chapter 2 Appropriation Accounts

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2.1 Summary of Appropriation Accounts
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24 Grants detailing working expenses and other revenue expenditure as voted by Parliament.
25 Grant detailing expenditure on Assets Acquisition, Construction and Replacement voted by Parliament.
26 A dedicated Central Road Fund was created by the Central Government for collection of cess from petrol
and diesel. A share of collection is provided to Railways for construction of road over/under bridges and
safety works at unmanned railway crossings.

Summary of Appropriation Accounts 2016-17
(` in crore)
Table 2.1 (a) Summary of Appropriation Accounts (2016-17)-Revenue Expenditure
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Net Revenue 165382.49
Expenditure
Note: 1. Credit of ` 5,046.24 crore was on account of recovery towards cost of staff from non-railway departments,
commission charges recovered from Defence, materials released from works, share of credits for freight charges on railway
materials, value of cinders and coal ash sold, credit for electric energy supplied to outsiders, sale proceeds of railway
canteens, amount met from Debt Service Fund etc.
Table 2.1 (b) Summary of Appropriation Accounts (2016-17)-Capital Expenditure
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(B) Total Capital Voted 117575.96 1714.97 119290.93 113364.62 -5926.31
Expenditure and
Charged
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(A)+ (B) Grand Voted 357332.90 4777.20 362110.10 324255.88 -37854.22
Total (Revenue and
and Capital) as Charged
per
Appropriation
Accounts 2016-17
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Net Expenditure (Revenue and Capital) as per Appropriation Accounts 210614.13
Total Expenditure as per Finance Accounts (2016-17) 210614.13
* This excludes ` 34,220 crore given by Ministry of Finance out of National Investment Fund (NIF) and
includes ` 10780 crore from Central Road Fund (CRF) as part of GBS.
Note: 1.Credit under Capital (` 46,921.11 crore) includes credit for released materials, clearance under
Suspense Heads (Stores Suspense, Workshop Manufacture Suspense and Miscellaneous Advance (Capital).
Table 2.1 (c) Capital Expenditure in Indian Railways (2016-17)
Particulars ` in crore
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Total Capital Expenditure 108290.14


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Table 2.2- Grants operated by Railways

No. Particulars Six Distinct Group
1 Railway Board Policy Formulation and
2 Miscellaneous Expenditure (General) Services Common to all
Railways
3 General Superintendence and Service on Railways General Superintendence and
Service on Railways
4 Repairs and Maintenance of Permanent Way and Works Repairs and Maintenance
5 Repairs and Maintenance of Motive Power
6 Repairs and Maintenance of Carriages and Wagons
7 Repairs and Maintenance of Plant and Equipment
8 Operating Expenses-Rolling Stock and Equipment Operation
9 Operating Expenses-Traffic
10 Operating Expenses-Fuel
11 Staff Welfare and Amenities
12 Miscellaneous Working Expenses Staff Welfare, Retirement
13 Provident Fund, Pension and Other Retirement Benefits Benefits and Miscellaneous
14 Appropriation to Funds Railway Funds and Payment
15 Dividend to General Revenues, Repayment of loans taken to General Revenues
from General Revenues and Amortization of over
Capitalization

Appropriation refers to expenditure charged on Consolidated Fund of India.


Chapter22Appropriation
Chapter Appropriation Accounts
Accounts

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Figure 2.1 Trend of Revenue Expenditure-Group-wise during 2014-15 to 2016-17

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Common to all and Service on and Miscellaneous Revenues
Railways Railways
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Figure - 2.2 Group wise Revenue Expenditure (2016-17)
General Policy
Superintendence and Formulation
Service on Railways and Services
0.037% Common to all
Railway Funds Railways
and Payment to 0.660%
General Repairs and
Revenues Maintenance
22.266% 19.799%
Staff Welfare,
Retirement
Benefits and
Operation
Miscellaneous
30.523%
26.715%


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Table- 2.3 Group wise Estimates, Expenditure and Variation (2016-17)
(` in crore)
Particulars Original Supplementary Total Actual Variation w.r.t. Percentage
Grant/ Provision Sanctioned Expenditure Sanctioned variation
Appropriation Grant Grant
(-) Saving/
(+) Excess
Policy 1700.01 0.00 1700.01 1343.23 (-) 356.78 (-) 20.98
Formulation and
Services Common
to all Railways
General 8361.84 0.00 8361.84 7560.50 (-) 801.34 (-) 9.58
Superintendence
and Service on
Railways
Repairs and 42453.91 0.43 42454.34 40291.43 (-) 2162.91 (-) 5.09
Maintenance
Operation 62479.38 3050.00 65529.38 62116.51 (-) 3412.87 (-) 5.21
Staff Welfare, 60751.16 11.80 60762.96 54366.59 (-) 6396.37 (-) 10.52
Retirement
Benefits and
Miscellaneous
Railway Funds 64010.64 0.00 64010.64 45213.00 (-) 18797.64 (-) 29.36
and Payment to
General Revenues
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Ɣ Railway Funds and Payment to General Revenues
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2.2 Financial Accountability and Budget Management: Excess over
Budget Provision
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Table 2.4 Excess Expenditure (2016-17)
(` in crore)
S. Particulars Original Supplementary Actual Excess
No. Provision provision Expenditure
Revenue-Voted
Nil
Revenue-Charged
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Total- Revenue-voted and Charged 2.00 0.42 2.51 0.09


Capital- Voted
16 5DLOZD\6DIHW\)XQG
Total Voted –Revenue and Capital 10780.30 0 10802.72 22.42
Capital-Charged
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Total Charged 62.25 195.52 268.39 10.62
Total Capital-Voted and Charged 10842.55 195.52 11071.11 33.04
Grand Total – Capital and 10844.55 195.94 11073.62 33.13
Revenue
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Trend of Excess in the Grants and Appropriations
Table 2.5 Excess Expenditure during the last three years
(` in crore)
Year No of No. of Original Supplementary Actual Excess Growth
Voted Charged Provision Provision Expenditure rate in
Grant Appropriation percent
2014-15 3 3 44,508.75 2,818.12 47,817.24 490.37 -81.97
2015-16 1 5 907.37 2.26 985.50 75.87 -546.33
2016-17 1 3 10844.55 195.94 11073.62 33.13 -128.93
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Table 2.6 Segment wise Expenditure under Grant No. 16
(` in crore)
Particulars Original Supplementary Total Actual Saving (-)/
Provision provision sanctioned Expenditure Excess (+)
provisions
Voted
Capital 90070.35 1519.45 91589.80 90186.63 (-) 1403.17
Railway Funds 16663.06 0 16663.06 12106.87 (-) 4556.19
Railway Safety Fund 10780.30 0 10780.30 10802.72 (+) 22.42
Total Voted 117513.71 1519.45 119033.16 113096.22 (-) 5936.94
Charged
Capital 49.17 170.83 220.00 228.05 (+) 8.05
Railway Funds 13.08 7.60 20.68 21.11 (+) 0.43
Railway Safety Fund 0 17.09 17.09 19.23 (+) 2.14
Total Charged 62.25 195.52 257.77 268.39 (+) 10.62
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Reserve Funds were Depreciation Reserve Fund (DRF), Development Fund (DF) and Capital Fund
(CF).

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Table-2.7-Component of Railway Funds
(` in crore)
provisions
Voted
Depreciation 7146.92 0 7146.92 6606.93 (-) 539.99
Reserve Fund
provisions
Development Fund 2516.14 0 2516.14 2499.95 (-) 16.19
Capital Fund 7000.00 0 7000.00 3000.00 (-) 4000.00
Total Voted 16663.06 16663.06 12106.88 (-) 4556.18
Charged
Depreciation 13.08 7.39 20.47 19.81 (-) 0.66
Reserve Fund
Development Fund 0 0.20 0.20 1.30 (+) 1.10
Capital Fund 0 0 0 0 0
Total Charged 13.08 7.59 20.67 21.11 (+) 0.44
Grand Total -Voted 16676.14 7.59 16683.73 12127.99 (-) 4555.74
and Charged

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Table 2.8-Appropriation to Railway Funds and withdrawal there from during the
last three years ended 31 March 2017
(` in crore)
Fund Particulars 2014-15 2015-16 2016-17
DRF Appropriation to Fund(BE) 7,050.00 8,100.00 3,400.00
Appropriation to Fund(Actual) 7,975.00 5,800.00 5,400.00
Excess (+)/Short (-) appropriation 925 (-)2,300.00 (+) 2,000.00
Expenditure/withdrawal from 7,286.93 7,588.95 4,982.01
fund
DF Appropriation to Fund(BE) 300.00 5,750.00 2,515.00
Appropriation to Fund(Actual) 1,374.94 1,219.74 2,515.00
Excess (+)/Short (-) appropriation 1,074.94 (-)4,530.26 0
fund
CF Appropriation to Fund (BE) 5,662.74 7,615.71 5,750.00
Appropriation to Fund (Actual) 6,233.36 5,798.24 2,398.00
Excess (+)/Short (-) appropriation 570.62 (-)1,817.47 (-) 3,352.00
fund
Total Appropriation to Fund (BE) 13,012.74 21,465.71 11,665.00
(Railway Appropriation to Fund (Actual) 15,583.30 12,817.98 10,313.00
Funds) Excess (+)/Short (-) appropriation 2,570.56 (-)8,647.73 (-) 1,352.00
fund
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Figure -2.3 Unsanctioned Expenditure
14000
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Sum of Original and Supplementary Grants


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2.8 Recommendations
➢ Allocation should be realistic and on conservative side keeping in view

the realistic assessment of revenue streams.
➢ Ministry of Railways should impress upon the budget controlling
authorities for regular monitoring of expenditure.
➢ Internal control mechanism should be strengthened to reduce the
instances of misclassification of expenditure.
➢ The unsanctioned expenditure should be controlled; administration

should ensure all unsanctioned expenditure is regularised on priority.

Chapter3 3Accounting
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Chapter 3 Accounting of Assets in Indian Railways

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Para 201 of Indian Railways Code for the Accounts Department (Part-I)
31
Block Account exhibits all the physical assets financed from different sources

Chapter
Chapter 33 Accounting of Assets
Accounting of Assetsin
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IndianRailways
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3.1.1 Summarized position of Consolidated Block Assets of IR
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Table 3.1-Value of Assets shown in Block Account of IR (2015-16)
(` in crore)
Sub-heads-Category Commercial Strategic Total
Lines Lines35
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20-/DQG
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32
New or additional improvement/replacement works (other than Passenger amenities works)
costing less than `
` one lakh from revenue.
33
Plan Heads included activities like New Lines, Gauge Conversion, Doubling, Track
Renewals, Railway Electrification, Rolling Stock, Machinery and Plant, Workshops and
Production Units etc.
34
Detailed Appropriation Accounts includes Budget and Expenditure under different Grants,
Statements, Annexures, Block Account, Balance Sheet, Profit and Loss Account etc. and
presented to the Parliament.
35
Strategic Lines-Railway lines of strategic importance constructed at the request of Defence
and under operation in four Zonal Railways viz. NR, NWR, WR and NEFR.
Report No.
Report No. 11 of
of 2018
2018 Page4646
Page
Chapter 3 Accounting
Chapter of Assets
3 Accounting in Indian
of Assets Railways
in Indian Railways
7100-6WRUH6XVSHQVH

7200-0DQXIDFWXULQJ6XVSHQVHDQG
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Total 4,28,512.42 3,025.46 4,31,537.88
Source: Part II-Detailed Appropriation Accounts-Annexure 'G'-Block Account (Commercial and
Strategic)-2015-16
Note-The above figures include expenditure from Capital (Gross Budgetary Support), CF, DRF,
DF, RSF, SRSF, OLW-R.
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Table 3.2-Value of Assets created in IR at the end of 2015-16
Sl. No. Source Value of Assets created
(` in crore)
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Source: Part II-Detailed Appropriation Accounts-Annexure 'G'-Part-II-Statement of Block
Account of Indian Government Railways including Loan Account (Commercial and
Strategic)-2015-16
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36
Contribution from Government of Maharashtra (CIDCO) etc.

Chapter
3 Accounting of Assets
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in Indian Railways
Railways
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37
Sub-head 1720 - ` 6.99 crore (2013-14-CR, NEFR)), ` 14.39 crore (2014-15-CR, NEFR,
NWR, SR) and ` 6.32 crore (2015-16-CR, ECoR). Sub-head-3320- ` 0.33 crore (2013-14-SR),
` 0.27 crore (2014-15-SR, SWR) and ` 0.21 crore (2015-16-SWR).
38
Expenditure incurred against ongoing projects
39
Standing Committee Report on Railways (2015-16) Sixteenth Lok Sabha Tenth Report on
Pending Projects
40
To be worked out on the basis of formulae given in Annexure-I of Para 430 of Indian
Railway Financial Code (Volume-I).

Chapter
AccountingofofAssets
Assetsin
inIndian
Indian Railways
Railways
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41
CR, ER, ECR, ECoR, NR, NCR, Metro Railway/Kolkata, NWR, SR, SER, SECR, WCR,
CLW and RWF.
42
Accounting Standards 13 on Accounting for Investments.
43
Issued by the Ministry of Corporate Affairs.

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Para 1720 of Indian Railways Code for Engineering Department
45
ER, NR, NCR, SR, SCR, SWR and NEFR.
46
CR, ECR, ECoR, NWR, SER, SECR,WR, WCR, NER, Metro Railway /Kolkata, RWF,RCF,
ICF, DMW.

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Paragraph 806 (b) of Indian Railways Way and Works Manual
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ER, NR,SR, SWR.
49
ER, ECoR, NR, NCR, NWR, SR, SECR, SWR, WR.
50
ECR, SCR, NER, ICF/Perambur and RWF/Yehalanka
51
Paragraph 4.6.2.3 of Chapter 4 of Railway Audit Report No. 24 of 2015 (Volume-II)
52
CR, ECR, NWR, SCR,SWR, Metro Railway/ Kolkata, ICF/Perambur and RWF/Yehalanka

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NEFR, SWR, WR and DMW/ Patiala
54
Finance lease is a lease that transfers substantially all the risks and rewards incidental to
ownership of an asset to the lessee.
55
Audit comments made in Para No. 1.11 of Report No.53 of 2015-Union Government
(Railways)-Railways Finances

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Part-I-Review-Appropriation Accounts (2015-16)

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57
Railway Convention Committee recommended that Dividend to General Revenues by the
Railways may be waived off for 2016-17. After merger of Railway Budget with General Budget
from 2017-18, GOI decided to exempt Railways from payment of Dividend to General
Revenues.
58
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Extra Budgetary Resources-Institutional Finance (Life Insurance Corporation of India)
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Expenditure under EBR (IF) during 2016-17 was ` 11,465.15 crore as reported by Accounts
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62
In supersession of Procedure Office Order No. 2011/ACII/1/6/RVNL dated 17-12-2013

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Action Taken Note on Para 11 of Report No. 53 of 2015-Railways Finances (September
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DRF balance at the end of 2016-17: ` 450.50 crore
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Railways Finances

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(Nand
(NAND
(NAND Kishore)
KISHORE)
KISHORE)

New New Delhi

Delhi Deputy
Deputy Comptroller
Comptroller and Auditor
andKishore)
Auditor General
General
New Delhi (NAND KISHORE)
(Nand
(NAND KISHORE)
(NAND KISHORE)
Dated: 03Date:
28 November
January 2018 2016Deputy Deputy
New05Delhi
Dated: February
New 2018
Delhi

Comptroller
Deputy (Nand

andand
Comptroller
Kishore)
Comptroller Auditor
and General
Auditor
Auditor General
General

Dated: 03Date:
New Delhi 28 November
January 2018 2016
Deputy Comptroller and Auditor General
(Nand Kishore)

Date: 28 November 2016
Countersigned
New Delhi Countersigned
Deputy Comptroller and Auditor General
Date: 28 November 2016 Countersigned
Countersigned
Countersigned
Countersigned
Countersigned
(Shashi Kant Sharma)
New Delhi Comptroller and Auditor General of India
(Shashi Kant Sharma)
Date: 28 November 2016
New Delhi
New Delhi
Comptroller
(Shashi Kant
(SHASHI and
KANT
(RAJIV
Auditor General of India
Sharma)
SHARMA)
MEHRISHI)
New Date: 28 November
Delhi (RAJIV MEHRISHI)
2016Comptroller and Auditor General of India
Dated:
New 06 February 2018

Delhi
Comptroller and
(Shashi
(SHASHI
Comptroller
andAuditor
Kant
KANT
Auditor
General
GeneralofofIndia
Sharma)
SHARMA) India
Date: 28 November 2016 (RAJIV MEHRISHI)
3HUFHQWDJH
New
Dated: 05 January 2018 Comptroller and Auditor General of India (Railways)
Delhi

37 Report No.32 of 2016
New
Date:Delhi
28 November 2016
Comptroller
and Auditor General of India

3HUFHQWDJH
Dated:
37
05 January 2018 Report No.32 of 2016 (Railways)

37
Report No.32 of 2016 (Railways)

37
Report No.32 of 2016 (Railways)

Report No.
Report No. 11 of
of 2018
2018 Page
Page 6060

75
75
75
GlossaryofofTerms
Glossary Terms
Glossary of Terms
Terms Description
17-Zones of Indian Central Railway (CR), Eastern Railway (ER), East
Railways Central Railway (ECR), East Coast Railway (ECoR),
Northern Railway (NR), North Central Railway (NCR),
North Eastern Railway (NER), Northeast Frontier
Railway (NFR/NEFR), North Western Railway
(NWR), Southern Railway (SR), South Central
Railway (SCR), South Eastern Railway (SER),
Southeast Central Railway (SECR), South Western
Railway (SWR), Western Railway (WR), West Central
Railway (WCR) & Metro Railway, Kolkata (MR)
8-Railway Chittaranjan Locomotive Works (CLW), Chittaranjan;
Production Units Diesel Locomotive Works (DLW), Varanasi; Integral
Coach Factory (ICF), Chennai; Rail Coach Factory
(RCF), Kapurthala; Rail Wheel Factory (RWF),
Yelahanka; Rail Wheel Plant (RWP), Bela; Diesel
Loco Modernisation Works (DMW), Patiala, Rail
Coach Factory (RCF), Raebareilly;
Average lead Average haul of a passenger or a tonne of freight
Branch lines Broad Gauge and Metre Gauge lines joined to the
main lines at one end only and all metre gauge lines
Broad Gauge It is a rail gauge (1,676 mm) commonly used in India
of movement of rail traffic
Capital-at-charge The capital-at-charge represents the Central
Government's investment in Railways by way of
loan capital and value of the assets thus created.
Compound Annual Rate of growth over a period of years, taking into
Growth Rate account the effect of annual compounding.
Demand Recoverable Unrealized earnings recoverable on account of
rent/lease of land and buildings, interest and
maintenance charges of sidings etc.
Dividend Under the 'Separation Convention' Indian Railways
(IR) is required to pay dividend to the general revenues
on the capital advanced by the Government of India
(GoI) at a rate determined periodically by Railway
Convention Committee (RCC).
Extra Budgetary Resources of IR other than general budget support and
Resources internally generated resources
Gross Domestic The total market value of all final goods and services
Product produced in a country in a given year,
Gross Traffic Receipts of railways through its operations
Receipts
Report
Report No.No.
1 of1 2018
of 2018 Page
Page 61 61

Glossary
Glossaryof of
Terms
Terms
Meter Gauge It is a rail gauge (1,000 mm) still used in some parts of
India of movement of rail traffic
Classification structure to record receipts and
Minor Heads
expenditure of the government
It is a rail gauge (762 or 610 mm) still used in some
Narrow Gauge
parts of India of movement of rail traffic
National Projects Projects of national importance being executed
through additional budgetary support from GoI.
Net Tonne Kilometre Unit of measure of freight traffic which represent the
(NTKM) transport of one tonne goods (including the weight of
any packing, but excluding the weight of the vehicle
used for transport) over a distance of one kilometre
New lines Construction/laying of new railway links/lines not
existed earlier
Operating Ratio The ratio of working expenses (excluding suspense but
including appropriation to Depreciation Reserve Fund
and Pension Fund) to gross earnings.
Ordinary Working Expenditure on administration, operation,
Expenses maintenance and repairs, contribution to Depreciation
Reserve Fund and Pension Fund
Plan Expenditure Expenditure incurred for creation, acquisition,
construction and replacement of assets
Revenue Expenditure incurred for day to day operations,
Expenditure maintenance of railways including dividend payment
Strategic lines Railway lines of strategic importance constructed at
the request of Defence
Traffic Suspense Unrealised operational earnings of the railways
Un-economic Branch lines where revenue generated is less than the
Branch Lines operational cost
Works Budget Estimates prepared for construction, acquisition and
replacement of assets
Route Kilometre The distance between two points on the railways
irrespective of the number of lines connecting them, viz
single line, double line etc.
Total Working Ordinary working expenditure and appropriation to
Expenditure Depreciation Reserve Fund and Pension Fund
Staff Productivity It is measured in terms of volume of traffic handled (in
terms of NTKM) per thousand employees.
Capital Output Ratio The amount of capital employed to produce one unit of
output (Total Traffic in NTKMs)
Net Surplus Difference between the gross earnings and the working
expenses after the payment of dividend to general
revenues


GlossaryofofTerms
Glossary Terms
Other Coaching Earnings from transportation of parcels, luggage and

Earnings post office mail and catering etc.,
Passenger Earnings Earnings from carrying passengers on rail
Freight Earnings Earnings from carrying goods on rail
PAC Public Accounts Committee
RDSO Research, Designs & Standard Organization
RITES Rail India Technical and Economic Services
RSP Rolling Stock Programme
Report
Report No.No. 1 of
1 of 2018
2018 Page
Page 6363

Appendix
Appendix – Chapter
– Chapter 1 1
Appendix – Chapter 1
Appendix-1
Appendix-1
Status of Railway Funds
Status Para
(Refer of Railway
1.10) Funds
(Refer Para 1.10)
Fund Description
Fund Description
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Source–Indian Railways Appropriation Accounts-Part-II-Detailed Appropriation Accounts
Source–Indian Railways Appropriation Accounts-Part-II-Detailed Appropriation Accounts


Appendix- 2
Chapter 2

Appendix-2- Appropriation Accounts 2016-17
(Reference Paragraph No.2.1)
In units of `)
Number and name Original Grant/ Supplementary Final Grant/ Actual Excess (+)/
of the Grant/ Appropriation Appropriation Expenditure Savings (-)
Appropriation
1 Revenue – Railway Board

Voted
4000100000 0 4000100000 3490124395 -509975605
2 Revenue – Miscellaneous Expenditure (General)
Charged 21100000 0 21100000 21100000 0
Voted 12978900000 0 12978900000 9921094442 -3057805558
3 Revenue – Working Expenses – General Superintendence and Services
Charged
13160000 0 13160000 11939914 -1220086
Voted
83605268000 0 83605268000 75593006398 -8012261602
4 Revenue – Working Expenses – Repairs and Maintenance of Permanent Way and Works
Charged 15007000 2154000 17161000 17938229 777229
Voted 137106786000 0 137106786000 128619226679 -8487559321
5 Revenue – Working Expenses – Repairs and Maintenance of Motive Power
Charged 2000000 0 2000000 377241 -1622759
Voted 63175964000 0 63175964000 60286945100 -2889018900
6 Revenue - Working Expenses – Repairs and Maintenance of Carriages and Wagons
Charged 2000000 0 2000000 833508 -1166492
Voted 143113229000 0 143113229000 140270273155 -2842955845
7 Revenue - Working Expenses – Repairs and Maintenance of Plant and Equipment
Charged 5000000 2145000 7145000 7197739 52739
Voted 81119068000 0 81119068000 73711490352 -7407577648
8 Revenue - Working Expenses – Operating Expenses – Rolling Stock and Equipment
Charged 5000000 0 5000000 93684 -4906316
Voted 127516286000 0 127516286000 116818167704 -10698118296
9 Revenue - Working Expenses – Operating Expenses – Traffic

Appendix – Chapter 2
Appendix- Chapter 2

Charged 20004000 0 20004000 4040452 -15963548
Voted 263080126000 0 263080126000 240070197574 -23009928426
10 Revenue - Working Expenses – Operating Expenses - Fuel
Charged 100000 0 100000 0 -100000
Voted 234172325000 30500000000 264672325000 264272637177 -399687823
11 Revenue – Working Expenses – Staff Welfare and Amenities
Charged 5510000 0 5510000 137896 -5372104
Voted 66220468000 0 66220468000 59511325790 -6709142210
12 Revenue - Working Expenses – Miscellaneous Working Expenses
Charged 1391967000 118026000 1509993000 1315288793 -194704207
Voted 68186020000 0 68186020000 60298787417 -7887232583
13 Revenue - Working Expenses – Provident Fund, Pension and Other Retirement Benefits
Charged 10045000 0 10045000 9325951 -719049
Voted 471697550000 0 471697550000 422531118257 -49166431743
14 Revenue - Appropriation to Funds – Depreciation Reserve Fund,
Development Fund, Pension Fund, Capital Fund, Debt Service Fund
Voted 542793500000 0 542793500000 452129993666 -90663506334
15 Dividend to General Revenues, Repayment of Loans taken from
General Revenues and Amortisation of Over-Capitalisation
Voted 97312900000 0 97312900000 0 -97312900000
16 Assets – Acquisition, Construction and Replacement - Other Expenditure – Capital
Charged 491700000 1708343000 2200043000 2280518428 80475428
Voted 900703500000 15194525000 915898025000 901866257675 -14031767325
Assets – Acquisition, Construction and Replacement – Other Expenditure – Railway Safety Fund
Charged 0 170872000 170872000 192285542 21413542
Voted 107803000000 0 107803000000 108027229844 224229844
Assets – Acquisition, Construction and Replacement - Other Expenditure – Railway Funds
Charged 130800000 75955000 206755000 211154326 4399326

Appendix- 2
Chapter 2

Voted 166630565000 0 166630565000 121068744811 -45561820189
Grand Total
Charged 2113393000 2077495000 4190888000 4072231703 -118656297
Voted 3571215555000 45694525000 3616910080000 3238486620437 -378423459563
Grand Total 3573328948000 47772020000 3621100968000 3242558852140 -378542115860



Report No.1 of 2018 - Finance Audit On Railways Finances in Indian Railways Union Government

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Report No.1 of 2018 - Finance Audit On Railways Finances in Indian Railways Union Government

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Report of the

Comptroller and Auditor General

For the year ended March 2017

Laid in Lok Sabha/Rajya Sabha on ______________

Union Government (Railways)

Executive Summary (i) – (v)

CHAPTER 1 – State of Finances

Summary of Current Year’s Fiscal Transactions 1.1 1

Fiscal Transactions in 2016-17-An overview 1.2 2

Unrealized Earnings 1.4 10

Application of Resources 1.6 13

Revenue Surplus 1.7 16

Efficiency Indices 1.8 16

Plan Expenditure 1.9 18

Railway Funds 1.10 20

Comments on Accounts 1.11 24

CHAPTER 2 – Appropriation Accounts

Summary of Appropriation Accounts 2.1 29

Financial Accountability and Budget Management 2.2 34

Capital Grant No. 16 – Assets, Acquisition, 2.3 36

Misclassification of Expenditure 2.4 39

Irregular Re-appropriation of Funds 2.5 42

CHAPTER 3- Accounting of Assets in Indian Railways

Block Account 3.1 45

Exhibition of Assets in Balance Sheet 3.2 49

Maintenance of Records 3.3 50

Acquisition of Rolling Stocks through Indian

Accounting and disclosure of EBR (IF) funded

Accounting of Rail Vikas Nigam Limited (RVNL)

Depreciation policy of IR 3.7 56

Accounting Reforms in IR 3.8 58

Glossary of Terms 61-63

Chapters 1 and 2 of the Report contain audit observations on matters arising

Chapter 3 of the Report contains audit observations on accounting of assets,

Unit Expansion of the abbreviation

ECR East Central Railway

ECoR East Coast Railway

NCR North Central Railway

NER North Eastern Railway

NEFR North East Frontier Railway

NWR North Western Railway

SECR South East Central Railway

SCR South Central Railway

SER South Eastern Railway

SWR South Western Railway

WCR West Central Railway

Metro Metro Railway Kolkata

Chapter 1 State of Finances

1.1 Summary of Current Year’s Fiscal Transactions

1Budget documents, Annual Statistical Statements of Indian Railways.

Report No. 1 of 2018 Page 1

Sl. Details Actual Budget Revised Actual

1.2 Fiscal Transactions in 2016-17-An overview

Standards Organization, Other Miscellaneous Establishments of IR, Statutory Audit etc.

Report No. 1 of 2018 Page 2

Report No. 1 of 2018 Page 4

Figure 1.2: Relative Share of various Resources of IR

Average Receipts 2011-16 Receipts 2016-17

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1.3.1.1 Freight Earnings

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