By Sanjay Raman Sinha
The Comptroller and Auditor General of India (CAG) has sounded an alarm over mounting operational and financial lapses in Indian Railways, uncovering losses to the tune of Rs 543 crore across 25 cases. These aren’t isolated incidents, but part of a broader pattern of systemic inefficiencies, policy violations, and weak financial oversight.
The CAG report reveals that a significant portion of these losses stems from shortfalls in revenue recovery—including Rs 148.61 crore in uncollected land license fees, Rs 55.51 crore in unpaid District Mineral Foundation (DMF) dues, and Rs 50.77 crore in unbilled shunting charges. The absence of timely billing and lax follow-up have allowed revenue to leak through the cracks.
Asset management tells a similarly troubling story: a growing backlog of over-aged rolling stock, underutilized assets, and poorly coordinated operational planning. In several cases, planning delays and weak inter-departmental communication led to inefficient deployment and avoidable costs.
Compounding the financial distress is a neglect of safety protocols. The CAG found omissions in mandatory track inspections and slow deployment of crucial safety systems like Kavach, India’s indigenous anti-collision technology. While the Railways has taken strides in some areas, the lack of comprehensive rollout and staffing shortfalls continue to pose serious risks.
The Railways’ financial model is under strain, weighed down by cross-subsidization where losses in passenger operations are offset by freight revenue. But even freight, once a reliable cash cow, is no longer a safe bet. Road transport has surged ahead, offering faster, more flexible logistics that are eating into the Railways’ market share.
This structural imbalance is reflected in the operating ratio, which hit a record 107.39 percent in FY 2021-22—meaning Indian Railways spent Rs 107.39 for every Rs 100 earned. This figure is not just unsustainable; it leaves no fiscal space for modernization, infrastructure upgrades, or preventive maintenance.
Veteran railway official Satya Prakash, IRTS (retd), offers an insider’s view: “Indian Railways faces significant revenue losses due to poor financial management and lack of coordination amongst different departments. Most losses are recoverable, but lethargic attitudes and apathy lead to unrecovered dues.”
Prakash stresses that both the finance and accounts wing and service departments share responsibility for this breakdown. “Timely billing and recovery are crucial. Monthly reviews, fixing accountability, and ensuring billing happens in parallel with service delivery can significantly plug revenue leakages,” he told India Legal.
Despite these systemic failures, the government has poured in fresh capital, earmarking Rs 2.40 lakh crore for FY 2023-24, prioritizing capacity expansion and safety. But many observers worry that financial infusion without structural reform amounts to little more than patchwork.
Railway Minister Ashwini Vaishnaw, who took charge in July 2021, has pushed through some reforms. These include accelerated rollout of safety technologies, ultrasonic flaw detection, and renewed focus on accident reduction. Yet, the progress is uneven. Kavach coverage remains limited, infrastructure bottlenecks persist, and flagship projects like the Mumbai-Ahmedabad bullet train and Western Dedicated Freight Corridor continue to miss deadlines and rack up cost overruns.
Meanwhile, daily operations struggle with staff shortages, outdated infrastructure, and overcrowded trains, all of which lead to diminished service quality, increased safety risk, and customer dissatisfaction. The freight segment, once the Railways’ mainstay, is stagnating, while passenger traffic has recovered only modestly post-pandemic.
From over-dependence on coal freight to underutilization of railway land and real estate, the Indian Railways faces not just a financial crisis, but a strategic one. Without reforms in governance, billing discipline, and asset management, the Railways will continue to run on borrowed time.