New accounting system for railways by Sept '08

The railways will have a brand new accounting system by September 2008, with phased transfer to the system expected to start from July next year. The new system of accounting will make a clear differentiation between infrastructure and operational costs.

Railways Financial Commissioner R Sivadasan has informed the committee on infrastructure that consultants for the project (Ernst & Young) had been appointed.

"The action plan has been finalised and the entire work will be completed by September 2008. The monitorable milestones will be sent to the Planning Commission," he said.

"Earlier our investments in infrastructure were not as huge as they are today. The need for a separate accounting system for infrastructure came about only recently," a senior railway official added.

This year, for instance, the railways are expected to spend over Rs 19,000 crore on capital expenditure, which is one of its highest ever.

Secondly, the shared costs for freight and passenger trains "" on track maintenance and railway station maintenance "" too would be apportioned according to usage in both segments of the railway business.

This would help the railways understand the cost efficiency of both its businesses better. "The new system will help plug overruns in freight as well as passenger business," the official said. The Committee on Infrastructure also discussed preparation of model concession agreements for various activities that are being pursued under public-private participation.

Planning Commission Member Secretary Rajeeva Ratna Shah raised the issue at the meeting which was attended by top officials of the Railway Board.

The concession agreements would cover initiatives like the proposed budget hotels and the maintenance of passenger amenities at select railway stations.

Chairman Railway Board JP Batra has already said the model agreements prepared by the consultancy RITES for running private container trains will be discussed by an inter-ministerial group.

According to railway sources, agreements for private partnerships in other spheres would also be prepared by RITES.