Public Expenditure Accountability of the Indian Railways

The Indian Railways (IR) is one of the chief logistics agents of the Government of India (GOI). Considering the significant GOI funding into IR, public expenditure accountability (PEA) becomes an issue of importance. This paper looks into different aspects of the expenditure and financial management of IR. The paper is divided into three portions. The first portion looks at the railway-government interface. The main areas of focus here include a brief examination of The Indian Railways Act, the financial interface between the GOI and IR (consisting of budgetary support, market sourced financing and dividend payments), evaluating the need for a separate railway budget, political interference in the activities of IR and the interaction of IR with state governments. The second portion of the paper deals with the internal financial management of IR. In this section, there is an effort to evaluate the revenue generation by IR along with suggestions for enhancing its potential. This is followed by a look at the issue of subsidies to IR. Investment decisions of IR and the Special Railway Safety Fund (SRSF) along with the issue of excess manpower and cost reduction are other topics included in this section. The paper ends with a roadmap to corporatisation as a possible solution to the problems IR is faced with. The main areas dealt with are financial issues, pensions, the need for customer focus, the importance of focus on core competencies and a need to revamp IRs administrative structure and attitude.