Rlys plan rejig of accounting practices

In a move aimed at increasing efficiency, the railways are considering a proposal to use their accounting reform programme to encourage inter-departmental competition. Under the plan, inefficient departments will have to pay penalty to the more efficient ones.

"For instance, we are mulling a track surcharge that a passenger or a freight department will have to pay the track department for over use or inefficient use of the tracks," a railway ministry official said.

He added that separate accounts would be prepared for freight and passenger segments that would be included under lines of business or earning centres. Under lines of services or the cost centres, infrastructure departments like tracks and coaching will be included.

The concept of penalties has been proposed to create incomes for the line of services, which only involves expenditure on constructing and maintaining infrastructure.

"The aim is to create a complete accounting system, where it is easy to keep track of the inefficiencies of the departments in terms of additional cost it is imposing on other departments," an official said.

If the line of services departments cannot match their income and expenditure through inter-departmental transfer of funds through the proposed system of penalties, the government can pitch in through subsidies.

"This will help the government channelise its subsidy in a desired direction. The government is more than willing to fund the infrastructural activities of Railways," the official said.

The sources said the railways would present its basic requirements to consultants, who would then work out the details.

The railways have already asked RITES to undertake the whole exercise from the selection of consultants for discussions and bringing out the final proposal.

It was also in the process of obtaining the Asian Development Bank's approval for procedures that were being followed for taking up the reforms, officials added.

The re-designing and implementation of the railways' accounting system is expected to be completed by June 2007.

The railways are seeking to bring its accounting system in line with internationally-accepted railway accounting standards and practice.