Railway Minister Suresh Prabhu today said accounting reforms will help reveal the true picture of railways and go hand-in-hand with accountability to have a huge impact on productivity.
Accounting reforms are part of the large agenda of railway transformation, he said.
"Unless accounting and accountability go hand in hand we will not be able to achieve the whole thing. We are working on that," he said at a CII conference on 'Accounting reforms in Indian Railways - a strategic mission for sustainable growth.'
Accounting reform is a process of integration of various activities to reveal the true picture of Railways, he stressed.
"It is a massive concept. It is just not confined to rituals to single to double entry and so on. We want to bring the real transformational concept. This is part of the large agenda of railways transformation which includes ERP, complete transformation of railways entire business is operated," Prabhu said.
After merger of Rail Budget with General Budget, accounting reforms is another big ticket reform agenda that the Railway Minister has undertaken.
"We want to price our services. If you want to price the services then it cannot be done without costing," he said.
Comparing accounting reforms with a health card, he said, "It is not maintaining accounts to display something that is the outcome of that particular expenditure. As we always believe accounting statement is a health card reflecting all your health parameters. Therefore, balance sheet should also look like that. In fact, it is not only Railways, the government as a whole is not preparing balance sheet."
Highlighting the need for accounting reforms involving shifting towards accrual system of accounting from cash system, Prabhu said, "Unless you have that you will not be able to understand whether you have done well or where you are heading."
He said despite several suggestions for change in the accounting system in the past this has not been made. "We have decided to go ahead to have the entire discourses on the accounting reforms."
However, he said moving away from single entry to double entry in the accounting system is not a great achievement.
Referring to his first budget speech, Prabhu said "I had spelt out what would be the vision of accounting reforms. And we said from book keeping we move on to something different. Integrate costing, and accounting, management informations system and accounting and that should reflect outcome.
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Prabhu said, "If you want outcome then you should have output. If you want output then you must go back to expenditure. You want to get back to expenditure then you must go to budgeting. The budgeting does not incorporate desired outcome itself."
Taking a dig at the UPA government, he said, "When the previous government presented the first outcome budget it was awful because it was supposed to be an outcome budget but it was not."
"What we are now trying to do is to move to integrated activities for the outcome but beginning with budget," he said, adding, "We have stakeholders, we have private investments we need transparency we need investors, they would also like to know how we are doing it."
Referring to the proposal of setting up Railway Development Authority as regulatory authority to fix fares and freight rates, Prabhu said, "This is related to pricing which will come through a regulator."
He said a large organisation like railways with 1.3 million employees should know the outcome.
"We will be able to bring a concept of productivity, whether you need so many people at certain places or not having enough people at some places. It is also disproportionate allocation of human resources. This particular system is though an accounting system. It is accounting for all including human resources, and also for accountability."
Railway advisor for accounting reforms Naresh Salecha said, "We believe in giving best services to the customers whether passengers or freight and to bring down the logistic cost. Accounting should be revealing to decision maker and for the investors so that they feel confident in investing money at a lower cost of interest."
Salecha said, "We want to do it on a mission mode and by 2019 we would be able to do it.
