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CAG counsels Rail fare hike, flays operating ratio decline

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New Delhi | Tuesday, Mar 13 2018 IST
The Comptroller and Auditor General (CAG) on Tuesday said operating ratio of Railways had deteriorated to the lowest level of 96.50 percent since 2000-01 when it was 98.34 percent and asked them to take up harsh measures such as increasing passenger and freight tariffs to reduce the losses.

In a report tabled in the parliament, the CAG said 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", the CAG advised. It also asked the railways 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", it said. Country's top auditor also criticised that "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". It further said that 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, and said "this practice needs to be scaled down".

The CAG said non-availability of sufficient funds in depreciation reserve fund to replace the over aged assets is indicative of weak financial health of railways. "The huge backlog of renewal and replacement of over aged assets in railway system needs to be addressed for safe running of trains", it said. It also suggested a number of measures the railways has to take in future that it need to take measures to improve competitiveness of its services vis-a-vis Road and Air travel.

"Allocation should be realistic and on conservative side keeping in view the realistic assessment of revenue streams", it said. The Railway Ministry should impress upon the budget controlling authorities for regular monitoring of expenditure and Internal control mechanism should be strengthened to reduce the instances of misclassification of expenditure, the top auditor said. "The unsanctioned expenditure should be controlled; administration should ensure all unsanctioned expenditure is regularised on priority", it advised. The CAG also said the 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", it said. The CAG further said that the 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. The Ministry needs to make provision for depreciation in a more scientific method by adopting relevant accounting policies, it auditor added.

UNI KNA SHK 2015

-- (UNI) -- C-1-1-DL0463-1286662.Xml

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