'Lalu's railways turnaround tale was a cosmetic exercise - The Times of India

03/09/15 1:41 pm

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'Lalu's railways turnaround tale was a cosmetic exercise

Mahendra Kumar Singh,TNN | Aug 6, 2011, 01.05 AM IST

NEW DELHI: Former rail minister Lalu Prasad's turnaround of railways from a loss-making to a profit venture was more of a
cosmetic exercise, reveals the government auditor's report.
According to CAG, it was the new practice of issuing a "statement of cash and investible surplus" that helped Lalu project a rosy picture. The auditor has
said that the innovation helped the former railway minister project a "cash and investible surplus" of Rs 88, 669 crore from 2004-2005 to 2008-2009
when the net revenue surplus was only Rs 34, 506 crore.
Railways calculated the net revenue surplus after meeting all expenditures, including payment of dividend and appropriation to depreciation reserve
fund (DRF) used for renewal or replacement of existing assets.
The 'cash surplus' in new presentation indicated the sum generated by railways from operations and other activities, including the interest on fund
balance. It shows the money available for paying dividend, appropriation to DRF and other funds for investment. The "investible surplus' was expected
to indicate the resources generated annually for capital expenditure after fulfilling the dividend liability.
CAG endorsed the white paper presented by Lalu's successor Mamata Banerjee in Parliament, which questioned the turnaround story, and pointed out
that "This was not accounting change but more in nature of presentation of financial projections from different perspective."
However, the railways' finances become worse during Mamata's tenure as the net revenue surplus saw a sharp decline from Rs 13,431 crore in 2007-08
to Rs 4,457 crore in 2008-09 to a paltry Rs 75 lakh in 2009-10.
Though, CAG mentioned that the poor state of affairs was due to the implementation of the 6th pay commission, which was Rs 37,472 crore during
2008-10, it also blamed the lower growth rate in traffic receipts and increase in working expense.
"During 2009-10, the gross traffic receipt increased by 9%, whereas ordinary working expense grew by 21% over the previous year," the report cited.
Railways efficiency measured by operating ratio (percentage of working expenses to traffic earnings) declined to 95.28% in 2009-10 from 90.46%
achieved in the previous year.
Out of 16 zonal railways, eight had operating ratio of more than 100%, which means that their working expenditure was more than traffic earnings.
The report reflects that the performance of the railways declined marginally during the last leg of Lalu's tenure and further worsened when Mamata was
at its helm.

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