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CAG recommends railways to hike passenger fares to recover operating costs

LiveMint logoLiveMint 10-03-2017 Jyotika Sood

New Delhi: The Comptroller and Auditor General of India (CAG) has recommended that Indian Railways revisit its passenger fares and other tariffs to recover operating costs.

The national transporter incurred a loss of Rs33,821.70 crore on passenger fares and for addition of extra coaches during 2014-15. Except AC-3 tier coaches, all categories of passenger services incurred losses in 2014-15, CAG said in a report presented in Parliament.

The auditor also directed the national carrier to curtail the number of concessional passes it hands out to recover its operating cost.

CAG, in its report on railway finances for the year ended March 2016, said Indian Railways earned a profit of Rs38, 312.59 crore from freight services. It indicates that 88.28% of the profit from freight traffic was utilized to underwrite the loss on passenger services and addition of coaches.

The report pointed out that the annual growth rate of freight earnings declined from 12.66% to 3.23% which was even lower than the compound annual growth rate of 15.01% achieved during 2011-15.

The government auditor said the productivity of Indian Railways staff had been deteriorating over the years. It said during 2010-11 to 2014-15, 560 cases of misclassification and mistakes in accounts to the tune of Rs3,548.95 crore was pointed out in audit and accepted by the ministry of railways.

Out of these 560 cases, 426 amounted to Rs3,031.36 crore and pertained to the six zonal railways. The report said that the errors that should have been detected by the accounts department through internal checks and rectified before closure of final accounts for the financial year, but remained unnoticed.

The CAG noted that operating ratio (money spent by Indian Railways to earn every Rs100 as revenue) improved to 90.49% in 2015-16 from 91.25% in 2014-15.

Indian Railways has tied up funding assistance from Life Insurance Corporation of India and it is important that the money it receives are used judiciously and not allowed to remain idle.

“Ministry of railways should impress upon the budget controlling authorities for regular monitoring of the flow of expenditure and budget allotment and take prompt action for seeking additional funds/surrender of funds allotted,” the report said.

Railway ministry spokesperson Anil Saxena refused to comment on the findings, saying that one government department can’t comment on a report by another.

A senior railway ministry official said on condition of anonymity, “This is not for the first time that the CAG has suggested increase in passenger fares. The recommendations have come earlier also and even the internal railway board members have suggested the same but the political masters are not ready to budge” so as not to alienate the public.

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