The CAG has indicted the Indian Railways for not employing strict checks and balances in its dual freight policy (DFP) for transportation of iron ore that led to a financial loss of nearly Rs 30,000 crore to the organisation between May 2008 and September 2013.
The DFP policy provides for categorisation of iron ore in two categories — for ‘domestic consumption and ‘other than domestic consumption’ (exports). The freight rate for latter category of iron ore was three times that of the former.
“The primary objectives of the DFP were to lower the cost of transport of iron for domestic producers and to keep freight charges for export of iron ore in sync with its rising international spot market prices and garner higher freight revenues in the event of increase in international price of iron ore,” the audit report said.
CAG’s report found that the rules laid down in DFP were not followed scrupulously that resulted in the railways’ failure to charge higher rates even for iron ore not meant for domestic consumption as stipulated.
The report documents several cases where the railways failed to either obtain prescribed documents before loading iron ore or allowed delivery at unloading points despite invalid submission of relevant documents in violation of the stipulated conditions.