Dual freight policy causes loss to Railways, says PAC

A parliamentary committee has come down heavily on the Railways for laxity on the part of the rail administration and failing in enforcement of the dual freight policy (DFP) framework which resulted in the financial loss to the tune of more than Rs 29,000 crore.
The Public Accounts Committee in its latest report has found that deficiencies in compliances with the laid down rules and procedures in booking and delivery of iron ore at domestic rate by railway officials resulted in loss to the Railways during May 2008 to September 2013.
The loss includes freight evasion of Rs 12,772.65 crore, non-imposition of penalty to the tune of Rs 11,418.65 crore, besides penalty of Rs 5,095.97 crore for diversion of trading the iron ore transported at domestic rate.

The report submitted in Parliament does not find rationale as to how a policy which was introduced to enable the Railways to accentuate its freight revenue has pushed the Railways to sustain losses.
The committee headed by Congress lawmaker KV Thomas is of the opinion that the Railway Ministry should have ensured strict compliance of laid down provisions and enforcement of initial scrutiny and check at all stages right from assessment of requirement of rules, allotment of rakes, acceptance of indents to loading and unloading.
The objective of dual freight policy were to lower the cost of transport of iron ore for domestic producers and to keep freight charges for export of iron ore in sync with its rising international spot market prices and garner high freight

revenues in the event of increase in international price of iron ore.

A number of shortcomings have been found in internal controls, checks and balances of railways which had severely hampered the effective implementation of the DFP.
The officials responsible for checking the requisite documents were not adequately trained to ensure complete compliance with the submission of all documents.
As a result they failed to exercise an effective check while performing duties leading to admission of invalid documents for availing domestic rate, non detection of cases of larger scale removal of iron ore from manufacturing units and short reporting of iron ore carried by railways at domestic rate.

The committee also wants railways to furnish all details to CBI without any delay for further investigation into the matter. Since CBI was investigating into several cases of DFP, the committee desire that CBI should also investigate the entire gamut of circumstances leading to formulation of DFP which proved to be mine of corruption.