In a report tabled in Parliament on Wednesday 23rd September, the Comptroller and Auditor General of India (CAG) has flagged the findings that the Indian Railways resorted to “window dressing” to show a surplus, instead of the loss incurred in the financial year 2018-19.
The Indian Railways have accounted an advance freight amount of Rs 8,351 crore received from two PSUs (NTPC and CONCOR) as revenue.
Any advance amount received from customers should be accounted as a liability in the balance sheet, instead of accounting it as revenue or income in the profit and loss account. The CAG also observed that the Indian Railways have under-provided for depreciation and pension liabilities.
In its report on railway finances, the CAG found, “If advance freight of Rs 8,351 crore from NTPC and CONCOR was not included in the earnings of 2018-19, the operating ratio would have been 101.77% instead of 97.29%.
The net surplus in 2018-19 was Rs 3,773.86 crore. Indian Railways would have ended with a negative balance of Rs 7,334.85 crore but for receipt of advance freight and less appropriation to depreciation reserve fund and pension fund.
The Ministry of Railways resorted to window dressing for presenting the working expenses and operating ratio in a better light.”
The CAG report brings out the fact that the Indian Railways have actually incurred a loss of Rs 7,334.85 crore in the Financial Year 2018-19, in the pre-pandemic period itself.
GST Cess collected was partly retained in Consolidated Find of India, instead of paying the entire cess collected as compensation to the States/ UTs
From the CAG report on cess collected, it appears that the Central Government has also resorted to window dressing of its finances, in order to show a lesser fiscal deficit.
