Railway budgetary mechanism faulty: CAG

New Delhi: Finding fault with the railway budgetary mechanism, Comptroller and Auditor General (CAG) has observed the national transporter is continuously incurring expenditure over and above the budgetary provisions sanctioned by Parliament.

The CAG report of the fiscal 2010-11 also found railways at fault for not presenting any of the statements of fiscal policy in Parliament as defined in the Fiscal Responsibility and Budget Management Act 2003.

The Audit also observed that follow-up action on the announcements made in the Railway Minister's budget speech were weak and no proper monitoring system appears to have been set in place as seen from the gaps in the outcome budget.

Increasing trend of unsanctioned expenditure indicated inaction on the part of the administration to get unsanctioned expenditure regularised, besides poor internal check mechanism, the CAG noted in its latest report tabled in Parliament on Tuesday.

"Instances of misclassification of expenditure continued to occur regularly in railways accounting system. Despite being pointed out by Audit and Public Accounts Committee repeatedly, adequate attention was not paid at various levels to eliminate cases of misclassification of expenditure," the report said.

PAC had time and again expressed its displeasure over incurring expenditure in excess of the sanctioned grants which was a clear indication of poor budgeting by railways.

Finding a huge gap in the budget as formulated and budget as executed, CAG has found 384 defective budgeting cases.

CAG suggested the Railways need to take a comprehensive relook at its budgeting process and make the projections more realistic, so as to ensure that funds are fully utilised for the purposes sanctioned.

"Railways should strengthen its budgetary mechanism and system of expenditure control so that...expenditure over and above authorisation are minimised," it said.

The report also suggested that railways should explore a mechanism of estimating supplementary grants more realistically so that fiscal discipline is maintained.

"Railways should fortify its internal controls to effectively reduce the instances of misclassification to foster responsibilities at the level of key controlling officers," the CAG said.