Rlys categorises projects for better returns
| Date :06-Jun-2019 |
By Sagar Mohod:
Set to remove discrepancies in physical utilisation of funds as against amount spent on projects
Aiming to get better returns on investment, top railway officials have insisted on bifurcating ongoing development projects to avoid mismatch in physical benefits against utilisation of funds. A meeting held in May was chaired by Chairman Railway Board (CRB) V K Yadav together with Financial Commissioner (FC) Vijay Kumar expressed concerns over utilisation of capital expenditure (CAPEX) on Indian Railways needs streamlining.
Principal Financial Auditors (PFAs) and officials of Finance Department of Railway Board, who were also in the meeting, found a mismatch in physical benefits as against funds spent on the development projects. In the aftermath of deliberations, focus of the Board is now on early completion of ongoing projects as the funds spread on them is quite large. Hence the projects are placed in three categories, super critical, critical and less critical to ensure proper earmarking of funds and remove unnecessary delay. Now, Railways is focusing on last mile projects so that they are completed and commissioned at the earliest to derive full benefits to the system. Similarly, it has fixed one year’s period for completing such projects. “The critical works would be those that can wait but not beyond next financial year.
Under this, projects that are nearing completion but still can be rolled over for a year more can be included,” said Financial Commissioner. Earlier, CRB V K Yadav appealed for better co-ordination between General Manager and PFA so that CAPEX utilisation could be improved. As per reports, though Railways do not have dearth of funds, the spending is not that enthusing resulting in increasing interest burden on funds. This is double jeopardy as already Railways have to pay interest on funds that are not utilised within a particular financial year due to various problems involved in decision-making.
During the meeting, Yadav insisted that PFA should provide clear cut observation on any projects and that to in one go. The remarks about viability of any projects should be either doable or not doable so that General Managers can then act judiciously. Yadav also insisted that any project that is taken-up by Zonal Railway will need to be weighed in physical progress achieved as against funds spent on it. This he underscored in definite measure since projects is stalled for various reasons and cost escalation ultimately is a drag on the funds that remained locked.
The FC, Vijay Kumar, stressed on data analysis to have better understanding of funds flow and ensure better utilisation of assists. “There is a need for looking for innovative financing given the wide scope of projects being tapped by Railways as it tries to modernise the transport sector,” he suggested. The meeting also held discussion on cost reduction on which Additional Member (Finance) wanted more focussed approach. Principal Executive Director (Finance) pointed to shortfall in all segments of earnings while there is rise in ordinary working expenses (OWE) that would reflect on operating ratio. Realising it as a major cause of concern, PFA were directed to focus attention on cost cutting measures and timely acquisition of assets. It was informed in the meeting that in the current financial year there will be additional burden on OWE to tune of Rs 10,000 crore due to hike in running allowance which has to paid with arrears. Also, there is an addition because of recruitment and increase in rate of Government contribution to New Pension Scheme.