In an effort to bring its operations at par with global best practices, the Railways plan to introduce a corporate model with focus on financial justification before the start of any new scheme. As per a new proposal being considered for implementation by the Railways, all its departments will be required to consult the financial commissioner before initiating work on any new scheme.
The new system, while ensuring financial discipline, will also help railways to shore up its operating margins that has suffered severely in last few years as it went about introducing new schemes without assessing its worth.
?An enlightened management has to take decisions with financial impact in mind. Financial discipline has to be ensured. The financial commissioner has moved the new proposal that he should be informed about every scheme. The departments are yet to discuss this proposal,? a senior official in Rail Bhavan told FE requesting not to be named.
Finance ministry and Planning Commission are also putting pressure on railways to ensure financial discipline and raise passenger fares after a lull of almost a decade. The move coming just before the presentation of the annual Railway Budget that will give details of the organisation’s performance to Parliament.
The new model has been proposed by Railways? financial commissioner Samar Jha who is spearheading the Budget preparation exercise with prime focus on presenting the Railways in good financial health. Even though Indian Railways has a board, till now departments prefer to work in isolation in many cases and do not consult their colleagues in other departments. A centralised reporting structure is needed to bring in the desired focus required for taking important decisions.
Railways’ financial position has deteriorated in the last two years with the entity spending almost all the operational earning on running trains and providing passenger amenities. At the end of November 2010, railways had spent Rs 1,300 crore more than the projection, while earnings fell short by Rs 1,100 crore.
Jha has also asked for a update on all existing projects of the railways and whether there is any delay leading to cost escalation. Railway officials have to provide the details by the end of this month.