CAG Report Highlights Rs 2,604.4 Crore Losses in Railways Due to Financial Mismanagement

The Comptroller and Auditor General of India (CAG) audits all financial transactions of the Central and State governments, including funds, deposits, and debts. Additionally, the CAG advises the President on record-keeping processes for both the Centre and the States.The Indian Railways, regarded as the backbone of the country’s transport infrastructure, is under scrutiny due to a CAG report highlighting financial mismanagement and losses of Rs 2,604.4 crore. This finding emphasises inefficiencies and raises serious concerns about the decision-making processes within the Ministry of Railways.

Bad Financial decisions from Railway:

The CAG’s audit, encompassing findings from the fiscal year 2021-22 and unresolved issues from prior years, reveals significant financial missteps that have led to substantial losses for the Railways. The reports indicate that the Railways mishandled public funds due to mismanagement, poor decision-making over time, and a lack of accountability. The Rs. 834.72 crore loss from interest payments on a Rs 3,200 crore loan to IRCON International Limited for a未 executed land development project underscores the pitfalls of inadequate planning and decision-making. Such mistakes can be avoided in the future with thorough project study and review.CAG’s serious allegation of a Rs 149.12 crore loss from 2018 to 2022 due to uncollected engine shunting charges in East Coast Railway highlights missed opportunities and a lack of strategic foresight.

GST Compliance issue raise by CAG:

CAG reported that the Railways’ non-compliance with Goods and Services Tax (GST) resulted in a Rs. 13.43 crore shortfall from siding owners. While this may seem minor compared to larger losses, it highlights broader issues of regulatory compliance and internal controls within the Railways. Immediate resolution is needed, and stronger actions should be implemented to collect outstanding GST and prevent future occurrences.

CAG questions on accountability and wrong awarded contract:

CAG reported that the North Eastern Railway’s construction of an unnecessary washing pit, costing Rs. 10.72 crore, was unsuitable for its intended purpose. Additionally, CAG noted that IRCON awarded a Rs. 1,110.80 crore contract to an ineligible bidder, circumventing crucial qualifying criteria, indicating favouritism or corruption.

Conclusion: CAG suggests that issues such as inadequate studies, improper awarding of contracts, and GST problems indicate that Indian Railways is not functioning effectively. These matters should be addressed promptly to prevent future losses.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.