Railways Faces Rs 2,604 Crore Financial Loss: Interest Payments and GST Recovery Issues in CAG Report
By: Admin|August 10, 2024|Categories: GST Recent News
he Comptroller and Auditor General of India (CAG) has released a detailed report on significant financial losses faced by Indian Railways, totaling Rs 2,604.40 crore. These losses stem from various issues, including unpaid loans, GST recovery problems, ineffective revenue strategies, and unproductive expenditures. The report incorporates findings from 33 case studies during the 2021-22 audit period and also addresses unresolved issues from previous years.
Key Findings of the CAG Report
1. Interest Payments on Loans Firstly, the report reveals that the Ministry of Railways incurred a Rs 834.72 crore loss due to interest payments on a Rs 3,200 crore loan given to IRCON for land development. Although IRCON repaid the loan with interest, the land remained undeveloped. Consequently, this situation raises questions about the Ministry’s decision-making. The CAG therefore recommends holding the responsible parties accountable and suggests improving decision-making for non-fare revenue, particularly towards the end of the fiscal year, with thorough feasibility studies.
2. Revenue Loss from Shunting Charges Secondly, the CAG discovered that Indian Railways lost Rs 149.12 crore because it failed to levy shunting charges in the East Coast Railway from 2018 to 2022. The report points out that bills for shunting charges should have been issued according to a Ministry Circular from February 2009. Thus, the CAG stresses the need to hold accountable those responsible for this lapse, which significantly impacts revenue generation.
3. Non-Compliance with GST Provisions Another critical finding is that Indian Railways did not levy GST on services provided to siding owners, leading to a Rs 13.43 crore loss. The CAG urges Railways to collect the outstanding GST promptly to mitigate these losses. Additionally, the report recommends establishing accountability at appropriate levels for the failure to implement GST provisions.
4. Failure to Revise Licence Fees Furthermore, the West Central Railway administration has faced criticism for not updating the licence fee for land and buildings leased to the Department of Posts for Railway Mail Services. This failure resulted in a Rs 10.61 crore loss. Therefore, the CAG advises the Ministry of Railways to execute agreements and collect revised licence fees without delay.
5. Contract Award to Ineligible Bidders Moreover, the report highlights favoritism in contract awards by IRCON International Limited. The company awarded a Rs 1,110.80 crore contract to an ineligible bidder, ignoring essential qualifying criteria. Consequently, the CAG calls for accountability regarding this decision, raising concerns about the integrity of the bidding process.
6. Unfruitful Expenditure on Construction Projects Finally, the CAG reports an unproductive expenditure of Rs 10.72 crore related to a halted construction project by the North Eastern Railway. The decision to stop the project after approval led to this loss. Hence, the report suggests that construction decisions should be made only after confirming site suitability and considering all relevant factors. The CAG emphasizes assigning accountability for initiating constructions without proper connectivity.
Conclusion
In conclusion, the CAG report highlights urgent issues within Indian Railways that need immediate attention to prevent further financial losses. The recommendations emphasize the need for accountability and prudent financial management. Addressing these issues will, therefore, enhance the operational efficiency of Indian Railways and protect public funds.
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