More reports on: Railways

Railways may lose over Rs1,07,000 crore as over 400 projects get delayed: CAG

19 December 2015

The Indian Railways stand to lose over Rs1,07,000 crore in cost overruns as execution of over 400 projects get delayed, the Comptroller and Auditor General of India (CAG) has said, adding that it has resulted in a huge throw-forward of Rs1,86,000 crore in respect of 442 ongoing projects.

The CAG, in its latest report tabled in Parliament, said a lack of consistency in prioritisation and execution of projects and under-utilisation of funds have combined to adversely impact the physical progress of projects.

"Target dates for completion of projects were either not fixed or not available on records of the Railway Administration. The physical progress was also slow where target for completion of project was fixed."

"Projects were delayed due to the delay in preparation / sanction of estimate and delay in acquisition of land. A delay in the completion of projects resulted in cost overrun of Rs1.07 lakh crore and huge throw-forward of Rs1.86 lakh crore in respect of 442 ongoing projects," the report adds.

The report pointed to the ad hoc manner of fund allocation, which resulted in lack of availability of finances for project execution. At the same time, CAG pointed out that there were also several instances of projects getting delayed because of under-utilisation of funds.

"There was lack of consistency in prioritisation of projects. While the allotment of funds was not proportionate to the requirement, there were several instances of under-utilisation of funds which had adverse impact on the physical progress of projects," it noted.

The railways, according to the CAG report, took up for execution 202 projects during 2009-14, in addition to ongoing projects, ignoring fund constraint and as a result only 67 projects were completed during the period.

CAG noted that 75 projects are ongoing for more than 15 years and of them, three projects are 30 years old. And, despite budgetary support from the finance ministry, there was little progress in some national projects, the auditor said.

On the cost-benefit side, CAG has found that the rate of return for 236 of the 442 pending projects was also less than the prescribed benchmark of 14 per cent.
CAG also found that in case of cost-sharing projects, a lack of coordination with state governments has badly affected the progress of projects as state government declined to bear the enhanced project cost, resulting in an increased cost burden of Rs13,135 crore on the Railways.

Railways also lost Rs137.41 crore in idle investment and wasteful expenditure because of ''deficient planning,'' CAG said citing several instances of collapse of tunnels, bridges, diversion of alignment, etc

"Delay in land acquisition caused slow progress of the project and two projects had to be frozen due to failure in acquisition of land resulting in wasteful expenditure of Rs 60.78 crore," CAG said.

The government auditor has asked railways to revisit all projects which are ongoing for more than 15 years and assess their viability.

Besides, CAG pointed to the need to ensure optimal utilisation of funds so as to avoid mismatch between allotment and utilisation of fund.

CAG has also suggested monitoring of execution of projects both at the Railway Board and at the zonal levels which need to be strengthened to avoid wasteful expenditure and blocking up of fund.

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