Business IdeasRlys white paper shows black spot in Lalu era
The white paper (official position statement) on organisational, operational and financial performance of the railways, presented in Parliament today, busted former railway minister Lalu Prasad’s claims of raking in record profits during his 2004-09 stint.
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The document says changes made in accounting norms during the last five years had inflated ‘cumulative cash surplus before dividend’ by a whopping 55 per cent to the claimed Rs 88,669 crore. If payouts for the sixth pay commission demands on an accrual basis (Rs 26,306 crore), and appropriation to the Depreciation Reserve Fund (Rs 22,952 crore) are taken into account, the figure falls to Rs 39,411 crore.
Dismissing Prasad’s claims that his regime had witnessed the financial best of the Railways, the report holds, “The best period for Indian Railways financially in the last two decades was not the last five years, but the period between 1991-96”.
In fact, it points out that if the generally accepted growth elasticity for transport of 1.25 is applied, the traffic growth performance has been “below par” for Lalu’s entire five-year period. The growth in the economy had, for the most part, fuelled growth in freight traffic. However, the railways’ contribution to the national GDP had remained stagnant at 1.18 during the period.
Still, it says several measures initiated between 2004-05 and 2008-09 such as augmentation of carrying capacity of wagons, reduction in terminal detention and increasing maintainence cycles for better asset utilisation had helped register a 14.11 per cent CAGR (compounded annual growth rate) in earnings from freight traffic. The efforts had been compounded by increases in freight rates, including a compounded increase of 44 per cent in foodgrain and 35 per cent in fertilisers.
Earnings from passenger operations show a CAGR of 10.52 per cent during the previous minister’s tenure. The report says though there had been no upward revision in general passenger fares, the earnings increased due to revision of upper-class fare structures and higher Tatkal charges.
The number of seats under the Tatkal scheme had been increased to 14.2 per cent in 2008-09 from 5.6 per cent in 2005-06. “This had the effect of reducing seat availability through the normal route, inconveniencing the public, but at the same time enhancing passenger earnings, without increasing fares.”
The white paper states the consultant who had been brought in to analyse the accounts of the railways of the past five years has suggested the financial reporting be made more transparent.