Railway Budget

Welcome to an overview & interactive session on

…. by

S. Chandra Sekhar,

Chief Financial Officer/HMRDC,

Bangalore .

Budget and Budgetary Budget and Budgetary ControlControl

• Statement of estimated receipts Statement of estimated receipts and expenditure and expenditure for the ensuing yearfor the ensuing year

• Annual financial statement or PlanAnnual financial statement or Plan

• Vital link in the overall Planning Vital link in the overall Planning ProcessProcess

• Makes Implementation possible of Makes Implementation possible of all all programme of a welfare state.programme of a welfare state.

Why have a Budget? Role and Why have a Budget? Role and Utility of BudgetUtility of Budget

Part of Parliamentary Control over Part of Parliamentary Control over Public FinancePublic Finance

Article 112(1) of ConstitutionArticle 112(1) of Constitution Mechanism for obtaining prior Mechanism for obtaining prior

approval for withdrawal and approval for withdrawal and expenditure from consolidated Fund of expenditure from consolidated Fund of IndiaIndia

Obtaining prior approval for imposing Obtaining prior approval for imposing taxestaxes

Besides the Constitutional Besides the Constitutional aspect…aspect…

Budget helps in :-Budget helps in :-

Planning, Optimization, setting Planning, Optimization, setting objectivesobjectives

Communicating complex plans in precise Communicating complex plans in precise quantifiable termquantifiable term

Delegation by establishing budgets Delegation by establishing budgets within budget up to unit levelwithin budget up to unit level

Controlling by periodical comparisons Controlling by periodical comparisons and reviews and making mid course and reviews and making mid course correctioncorrection

Facilitates accountabilityFacilitates accountability

Structure of a Government Structure of a Government BudgetBudget

Review of preceding years’ receipts Review of preceding years’ receipts and expenditureand expenditure

Revised estimates for current year Revised estimates for current year based on first half year trendsbased on first half year trends

Estimates for next yearEstimates for next year

Structure of a Government Structure of a Government BudgetBudget Estimate are separately grouped in Estimate are separately grouped in

respect of capital and Revenue respect of capital and Revenue Estimate are separately dealt with in Estimate are separately dealt with in

respect of voted and charged expenditurerespect of voted and charged expenditure Charged expenditure – not put to vote Charged expenditure – not put to vote

Article 113( 1 )Article 113( 1 ) Example of charged expenditureExample of charged expenditure – salary – salary

and allowances of CAG, expenditure to and allowances of CAG, expenditure to fulfill decreetal amount, any other amount fulfill decreetal amount, any other amount declared as charged by Constitutiondeclared as charged by Constitution

Voted expenditure – Art 113(2) – requires Voted expenditure – Art 113(2) – requires vote of Parliamentvote of Parliament

Anything which is not charged is voted. Anything which is not charged is voted.

Essentials of a budgetEssentials of a budget Budget is a legislation – Finance and Budget is a legislation – Finance and

Appropriation Bills. It is at once a financial Appropriation Bills. It is at once a financial & political document.& political document.

Budget should reflect strategy/ideology/ Budget should reflect strategy/ideology/ philosophy and vision.philosophy and vision.

It should offer a roadmap in the short & It should offer a roadmap in the short & medium term towards a vision in the long medium term towards a vision in the long termterm

Budget should provide continuity and Budget should provide continuity and confidence to all constituencies.confidence to all constituencies.

Budget should address both short term and Budget should address both short term and long term imperatives and not be a long term imperatives and not be a ritualistic incremental exercise.ritualistic incremental exercise.

RAILWAY BUDGETRAILWAY BUDGET

Separated from General Budget in Separated from General Budget in 19241924

Ackworth Committee Ackworth Committee Recommendations – separation Recommendations – separation conventionconvention

Railway Convention CommitteeRailway Convention Committee

Railway BudgetRailway Budget

Annual Financial Statement i.e. an Annual Financial Statement i.e. an estimate of Receipts and expenditure for estimate of Receipts and expenditure for the year.the year.

As per Article 112(1) of the Constitution it As per Article 112(1) of the Constitution it should be laid before both Houses of should be laid before both Houses of Parliament for consideration and sanction Parliament for consideration and sanction of voted portion. Charged expenditure-of voted portion. Charged expenditure-Appropriations sanctioned by President.Appropriations sanctioned by President.

It is also a Management Document.It is also a Management Document.

Salient Features of Railway Salient Features of Railway Budget - StructureBudget - Structure

Expenditure classified by Expenditure classified by activityactivity groups groups

- called Demands for Revenue - called Demands for Revenue ExpenditureExpenditure

- called Plan Heads for capital - called Plan Heads for capital ExpenditureExpenditure

Revenue Demands are 1 to 15Revenue Demands are 1 to 15

Capital Demand is No 16Capital Demand is No 16

Railway BudgetRailway Budget Can we see a similar national will and Can we see a similar national will and

vision reflected in the Railway Budget vision reflected in the Railway Budget in the last 12 years? – in the last 12 years? – Obviously no.Obviously no.

Railway budget have been merely Railway budget have been merely balancing exercisesbalancing exercises

Stuck in outdated paradigm (example/ Stuck in outdated paradigm (example/ model/ pattern/ prototype), held back model/ pattern/ prototype), held back by past glory.by past glory.

No reform agenda, just incrementalNo reform agenda, just incremental

However things appear to However things appear to be changing in IR – Why?be changing in IR – Why?

PSU’s are getting dismantled – No more PSU’s are getting dismantled – No more captive customer bankscaptive customer banks

Leads are falling due to new trade flows and Leads are falling due to new trade flows and import deregulation & developmentimport deregulation & development

Roads are making rapid progressRoads are making rapid progress Air travel costs are dropping with technology Air travel costs are dropping with technology

break through and deregulationbreak through and deregulation Reforms are happening everywhereReforms are happening everywhere Media attention on falling safety standard in IRMedia attention on falling safety standard in IR Leading to all round expectation of reform in Leading to all round expectation of reform in

IR.IR.

Railway BudgetRailway Budget

Constitutional ProvisionsConstitutional Provisions Democratic System of Government Democratic System of Government

LegislatureLegislature Executive Executive Judiciary Judiciary

Railway Budget - contd.Railway Budget - contd. Parliamentary control over expenditureParliamentary control over expenditure

Approval to demands for grant by Approval to demands for grant by various ministriesvarious ministries

Approval to appropriation accounts Approval to appropriation accounts after examination by Public Accounts after examination by Public Accounts committee committee

No expenditure possible without budget No expenditure possible without budget except contingencies except contingencies

The Railway Budget - contdThe Railway Budget - contd

The financial forecast in the The financial forecast in the Budget is related to performance Budget is related to performance targets set for the Railway targets set for the Railway AdministrationsAdministrations

Performance Budget is part of Performance Budget is part of Budget document Budget document

Compilation LevelsCompilation Levels

o Department Wise Department Wise

o Divisions/workshops Divisions/workshops

o Zonal HQs Zonal HQs

o Railway Board Railway Board

Approval of MRApproval of MR Documents are submitted to the Hon’ble Minister for Documents are submitted to the Hon’ble Minister for

Railways for approval after clearance from Ministry Railways for approval after clearance from Ministry of Finance & Planning Commission for Plan of Finance & Planning Commission for Plan expenditure if the cost exceeds 100crs.expenditure if the cost exceeds 100crs.

Approval of extended Board (EB) is taken for projects Approval of extended Board (EB) is taken for projects costing over prescribed limit before these can be costing over prescribed limit before these can be included in Pink Book and approval of MR is taken. included in Pink Book and approval of MR is taken. Members of EB are Secretary Planning Commission, Members of EB are Secretary Planning Commission, Secretary Expenditure, Secretary Ministry of Secretary Expenditure, Secretary Ministry of Programme Implementation and Full Board.Programme Implementation and Full Board.

Works/proposals more than Rs.50 lakhs, is approved Works/proposals more than Rs.50 lakhs, is approved by Hon’ble MR before inclusion in the Pink Bookby Hon’ble MR before inclusion in the Pink Book

Presentation to ParliamentPresentation to Parliament

The complete set of budget papers The complete set of budget papers containing detailed estimates of each containing detailed estimates of each Railway along with summary are Railway along with summary are presented to Parliament.presented to Parliament.

Recommendations of President under Recommendations of President under Art 113(3) of the Constitution is Art 113(3) of the Constitution is obtained before the Budget is obtained before the Budget is presented to parliament.presented to parliament.

Approval by parliamentApproval by parliament Budget is a money Bill. After presentation Budget is a money Bill. After presentation

of Budget in Parliament it is reviewed by of Budget in Parliament it is reviewed by Standing Committee. .Standing Committee. .

After Budget is passed by parliament and After Budget is passed by parliament and given assent to by President, funds given assent to by President, funds become available to Railway Board.become available to Railway Board.

Budget orders are issued in two stages-On Budget orders are issued in two stages-On account allotment for April & May and full account allotment for April & May and full Budget allotment by May-June.Budget allotment by May-June.

Supplementary Budget presented if neededSupplementary Budget presented if needed

Various types of Budget in Various types of Budget in voguevogue

Historical or trend or incremental Historical or trend or incremental Budget.Budget.

Conventional Budget – Conventional Budget – Incremental input Incremental input oriented oriented

Performance Budget – output Performance Budget – output oriented oriented

Zero Based Budget – Justify all Zero Based Budget – Justify all activities activities De NovoDe Novo

Integrated BudgetIntegrated Budget

Who prepares the Budget?Who prepares the Budget?

Budget preparation is the Budget preparation is the responsibility of the Executiveresponsibility of the Executive

Respective Departmental Heads Respective Departmental Heads must prepare their portionsmust prepare their portions

Accounts Department is responsible Accounts Department is responsible for vetting the justification, outlays for vetting the justification, outlays proposed and for compilationproposed and for compilation

Budgetary Control and Budgetary Control and ReviewReview Essential for mid course corrections Essential for mid course corrections

and optimal utilization of resourceand optimal utilization of resource First stage is monthlyFirst stage is monthly budgetary budgetary

reviewreview Quarterly Review –Quarterly Review – August Review – AugustAugust Review – August Revised Estimate & (BE) – NovemberRevised Estimate & (BE) – November Final Modification – FebruaryFinal Modification – February Violent modification - End of Violent modification - End of

February/March February/March

Budgetary Control and Budgetary Control and ReviewReview

Closing of Cash Accounts – 31Closing of Cash Accounts – 31stst MarchMarch

Final Closing – May/JuneFinal Closing – May/June Appropriation Account to Parliament Appropriation Account to Parliament

vetted by CAG vetted by CAG - Sept- Sept Hence a Budget cycle starts in Hence a Budget cycle starts in

November of preceding year and November of preceding year and completes in September of completes in September of succeeding year – 23 months.succeeding year – 23 months.

Budget documentsBudget documents Speech of MR, Part I & II (fare and freight proposals).Speech of MR, Part I & II (fare and freight proposals).

Explanatory Memorandum on Railway Budget.Explanatory Memorandum on Railway Budget.

Memorandum explaining the Budget proposals for Memorandum explaining the Budget proposals for adjustment in Freight rates and fares.adjustment in Freight rates and fares.

Demands for Grants I (Summary), II (Details)Demands for Grants I (Summary), II (Details)

Pink Book I , II ( detailed programme), III (Green Pink Book I , II ( detailed programme), III (Green Book) Book) ((Works, Machinery and Rolling Stock Programme)Works, Machinery and Rolling Stock Programme)

Railway revenue and expenditure of the Central Govt, Railway revenue and expenditure of the Central Govt, Performance Budget, Safety Bulletin, Indian Railway Performance Budget, Safety Bulletin, Indian Railway Year Book & Annual Report, & Accounts and Annual Year Book & Annual Report, & Accounts and Annual Statistical Statement.Statistical Statement.

The Budgetary Process The Budgetary Process Review of the preceding year’s performance.Review of the preceding year’s performance. Actual of previous year.Actual of previous year.

Actual of receipt & expenditure up to Actual of receipt & expenditure up to November and trend for remaining months November and trend for remaining months of current yearof current year

Proposals for meeting requirement of the Proposals for meeting requirement of the current year.current year.

Estimate of receipts and expenditure of the Estimate of receipts and expenditure of the coming year.coming year.

Revenue Budget through Demands for Revenue Budget through Demands for Grants (D1 to D15)Grants (D1 to D15)

Revised GrantsRevised Grants

Supplementary GrantsSupplementary Grants

Changes in Budget supplementary Changes in Budget supplementary grants and Re-appropriation.grants and Re-appropriation.

Be careful while demanding Be careful while demanding additional amount.additional amount.

Revenue & Capital BudgetRevenue & Capital Budget

For maintenance and operation For maintenance and operation of servicesof services

Short term (One year)Short term (One year) Demand no 1 to 15Demand no 1 to 15

For New Assets/ReplacementFor New Assets/Replacement Works, M&P, RSP Budget under Works, M&P, RSP Budget under

different Plan Heads- (D-16).different Plan Heads- (D-16).

Revenue BudgetRevenue Budget

Demand 1,2 and 3 are of general nature – on Demand 1,2 and 3 are of general nature – on cost or overhead exp.cost or overhead exp.

1 and 2 are for Railway Board and attached 1 and 2 are for Railway Board and attached officesoffices

Demand 3 is for Zonal RailwayDemand 3 is for Zonal Railway Each demand has a two way classification – Each demand has a two way classification –

activity and object of expenditureactivity and object of expenditure Activity tells why or on what specific activity Activity tells why or on what specific activity

expenditure is incurredexpenditure is incurred Object of expenditure or PRIMARY UNIT tells Object of expenditure or PRIMARY UNIT tells

on what specific objective expenditure is on what specific objective expenditure is incurredincurred

Demand 3 to 13Demand 3 to 13

Called ordinary working expensesCalled ordinary working expenses Demand – 3 overheadDemand – 3 overhead Demand 4,5,6,7 – Repairs and MaintenanceDemand 4,5,6,7 – Repairs and Maintenance Demand 8,9,10 – OperationsDemand 8,9,10 – Operations Demand 11, 12 – Welfare and Demand 11, 12 – Welfare and

MiscellaneousMiscellaneous Demand 13 – Retirement benefitDemand 13 – Retirement benefit Demand 14 – Appropriation to Railway Demand 14 – Appropriation to Railway

FundsFunds

Demand No 15Demand No 15 This is the Dividend payable to general This is the Dividend payable to general

exchequer (Central Government )exchequer (Central Government )

It is more or like a debt service chargesIt is more or like a debt service charges

Is calculated presently at 4% or 5 %of Is calculated presently at 4% or 5 %of capital at charge capital at charge

Capital at charge is the total loans taken Capital at charge is the total loans taken from Central Government cumulatively as from Central Government cumulatively as “Budgetary Support”“Budgetary Support”

The rate of interest is periodically The rate of interest is periodically reviewed by R.C.C.reviewed by R.C.C.

DEMAND DEMAND NONO

DESCRIPTION OF HEADSDESCRIPTION OF HEADS

0101 Policy Formulation and directives common to all RailwaysPolicy Formulation and directives common to all Railways

0202 Miscellaneous ExpenditureMiscellaneous Expenditure

0303 General Superintends and services on RailwaysGeneral Superintends and services on Railways

04 04 Repairs and maintenance of P.Way and WorksRepairs and maintenance of P.Way and Works

0505 Repairs and maintenance of Motive PowerRepairs and maintenance of Motive Power

0606 Repairs and maintenance of Carriages and WagonsRepairs and maintenance of Carriages and Wagons

0707 Repairs and maintenance of Plant and EquipmentRepairs and maintenance of Plant and Equipment

0808 Operating Expenses- Rolling StockOperating Expenses- Rolling Stock

0909 Operating Expenses- TrafficOperating Expenses- Traffic

1010 Operating Expenses-FuelOperating Expenses-Fuel

1111 Staff Welfare and amenitiesStaff Welfare and amenities

1212 Miscellaneous Working ExpensesMiscellaneous Working Expenses

1313 PF Pension and other retirement benefitsPF Pension and other retirement benefits

Total Working ExpensesTotal Working Expenses

Sum of ordinary working Expenses and Sum of ordinary working Expenses and appropriation to DRF and Pension Fund appropriation to DRF and Pension Fund

Allocation to DRF and Pension Fund are Allocation to DRF and Pension Fund are costs that have to be covered/incurred – costs that have to be covered/incurred – obligatoryobligatory

Allocation to other funds DF, CF, SF are in Allocation to other funds DF, CF, SF are in the nature of appropriation from surplusthe nature of appropriation from surplus

Primary Units (Objects) of Primary Units (Objects) of ExpenditureExpenditure

0101 Salaries and WagesSalaries and Wages

0202 Dearness Pay and Dearness Dearness Pay and Dearness AllowancesAllowances

0303 Productivity Linked BonusProductivity Linked Bonus

0404 House Rent allowancesHouse Rent allowances

0505 Compensatory (City) AllowancesCompensatory (City) Allowances

0606 Interim ReliefInterim Relief

0909 Wages of Casual LabourWages of Casual Labour

1010 Kilometre allowanceKilometre allowance

1111 Overtime allowanceOvertime allowance

12 Night duty allowances12 Night duty allowances1313 Other allowancesOther allowances1414 Fees and honorariaFees and honoraria1515 Transfer allowanceTransfer allowance1616 Travelling expensesTravelling expenses1717 Air Travel Expenses sanctioned in Air Travel Expenses sanctioned in

lieu of privilege passeslieu of privilege passes1818 Office expensesOffice expenses1919 Rental for P&T telephone and call Rental for P&T telephone and call

charges including Trunk callscharges including Trunk calls2121 Advertising expensesAdvertising expenses

Primary Units (Objects) of Expenditure

2222 UtilitiesUtilities2323 Rental for office equipment Rental for office equipment

(other than Data Processing)(other than Data Processing)2424 Printing and stationery Printing and stationery

including Publicationsincluding Publications2727 Cost of materials from stockCost of materials from stock2828 Cost of materials-Direct Cost of materials-Direct

purchasepurchase3131 Fuel for other than tractionFuel for other than traction3232 Contractual paymentsContractual payments3333 Transfer of debitsTransfer of debits

Primary Units (Objects) of Primary Units (Objects) of ExpenditureExpenditure

3434 Adjustment of Wages on POH and Adjustment of Wages on POH and other repairs from WMS account to other repairs from WMS account to Revenue HeadsRevenue Heads

3535 Adjustment of materials on POH Adjustment of materials on POH and other repairs from WMS to and other repairs from WMS to Revenue HeadsRevenue Heads

3636 Excise duty paid/payable for Excise duty paid/payable for purchase of materialspurchase of materials

3737 Customs duty paid/payable for Customs duty paid/payable for purchase of materials.purchase of materials.

3838 Sales Tax paid/payable for purchase Sales Tax paid/payable for purchase of materials.of materials.

3939 Air Travel (Domestic)Air Travel (Domestic)4040 Air Travel (Foreign)Air Travel (Foreign)9999 Other expenses.Other expenses.

Primary Units (Objects) of Primary Units (Objects) of ExpenditureExpenditure

CAPITAL BUDGETCAPITAL BUDGET Demand no 16 Demand no 16

Popularly called Pink bookPopularly called Pink book

Also called Works, Machinery and Also called Works, Machinery and Rolling Stock Programme (3 elements)Rolling Stock Programme (3 elements)

Works Programme deals with all Works Programme deals with all proposal for creation or proposal for creation or replacement/renewal of Fixed assetsreplacement/renewal of Fixed assets

Capital BudgetCapital Budget

Book containing Works, Machinery and Book containing Works, Machinery and Rolling stock (RSP) programme called Rolling stock (RSP) programme called Pink Book.Pink Book.

Chief Engineer coordinates works Chief Engineer coordinates works programprogram

Chief Mechanical Engineer co-ordinates Chief Mechanical Engineer co-ordinates the Machinery and Plant (M&P) Program.the Machinery and Plant (M&P) Program.

Rolling stock coordinated by Railway Rolling stock coordinated by Railway Board through CME.Board through CME.

CAPITAL BUDGETCAPITAL BUDGET

Rolling stock Programme deals with Rolling stock Programme deals with proposals regarding moving assets – proposals regarding moving assets – locos, coaches and wagonslocos, coaches and wagons

Machinery and Plant Programme Machinery and Plant Programme Deals with proposals regarding Deals with proposals regarding supporting assets – workshops and supporting assets – workshops and maintenance sheds maintenance sheds

CME coordinates for both RSP and CME coordinates for both RSP and M&PM&P

Allocation is Plans Head WiseAllocation is Plans Head Wise

Source of FundSource of Fund

Basically four categoriesBasically four categories

Budgetary support or capitalBudgetary support or capital Internal generation – DRF, DF, CF, SFInternal generation – DRF, DF, CF, SF DF is further divided into DF –1,2,3,4DF is further divided into DF –1,2,3,4 Market borrowings through IRFCMarket borrowings through IRFC

Railway FundsRailway Funds

DRF – Depreciation Reserve Fund DRF – Depreciation Reserve Fund

DF - Development FundDF - Development Fund

CF - Capital FundCF - Capital Fund

SF - Safety FundSF - Safety Fund

PF - Pension Fund PF - Pension Fund

CAPITAL : This is the plan assistance given by the Govt., of India thro’ Planning commission for investment on Railway Projects

DRF: Internal source of finance from the surplus of the Railway to meet the cost of renewal and replacement of assets.

DF: This is also an internal source for the purpose of meeting the requirements against safety, Passenger Amenities, Labour Welfare etc.

RSF: Safety Surcharge collected from the passengers are the source to this fund to meet the investment on the safety.

Non- Budgetary Sources for Capital Non- Budgetary Sources for Capital

expenditure.expenditure. Market borrowings through IRFC to Market borrowings through IRFC to

finance RSP,M&P items on lease basis.finance RSP,M&P items on lease basis.

Built Own and Transfer (BOT) , Built Built Own and Transfer (BOT) , Built Own and Lease and Transfer (BOLT) Own and Lease and Transfer (BOLT)

National Rail Vikas Yojana projects National Rail Vikas Yojana projects through Rail Vikas Nigam Ltd. (RVNL).through Rail Vikas Nigam Ltd. (RVNL).

Capital Plan HeadsCapital Plan Heads

Plan Plan HeadHead

ss

NameName Plan Plan HeadsHeads

NameName

1111 New LinesNew Lines 1212 Purchase of Purchase of new linesnew lines

1414 Gauge Gauge conversionconversion

1515 DoublingDoubling 1616 Traffic Traffic facilities, yard facilities, yard remodellingremodelling

Capital Plan Heads --Capital Plan Heads --contdcontdPlan Plan

HeadHeadss

NameName Plan Plan HeadHead

ss

NameName

1717 ComputerizationComputerization 1818 Railway Railway ResearchResearch

2121 Rolling stockRolling stock 2929 Road Safety Road Safety Works-level Works-level crossingcrossing

3030 Road Safety Road Safety works-Road works-Road Over/under Over/under bridgesbridges

3131 Track Track renewalsrenewals

Capital Plan Heads --Capital Plan Heads --contdcontd

3232 Bridge worksBridge works 3333 Signalling and Signalling and Telecomm Telecomm worksworks

3434 Taking over line Taking over line wires from P&T wires from P&T deptdept

3535 Electrification Electrification projectsprojects

3636 Other electrical Other electrical worksworks

4141 Machinery and Machinery and PlantPlant

4242 Workshops incl. Workshops incl. Prodn. unitsProdn. units

5151 Staff quartersStaff quarters

Capital Plan Heads ---Capital Plan Heads ---contdcontd5252 Amenities for Amenities for

staffstaff5353 Passengers Passengers

amenitiesamenities

6262 Inv.in Govt. Inv.in Govt. Comml. Comml. undertakingundertaking

6464 Other Specified Other Specified worksworks

7171 Stores SuspenseStores Suspense 7272 Manufacture Manufacture suspensesuspense

7373 Miscellaneous Miscellaneous advancesadvances

8181 Metropolitan Metropolitan Transport Transport projectsprojects

8282 Transfer to SRSFTransfer to SRSF

Primary Units (Objects) Primary Units (Objects) Expenditure for WorksExpenditure for Works

11 Pay& allowances of Pay& allowances of Departmental EstablishmentDepartmental Establishment

0101

22 Payment to Casual LabourPayment to Casual Labour 0202

33 Payment to contractors and Payment to contractors and others for Engineering works others for Engineering works or supply and erection or supply and erection contracts etc.contracts etc.

0303

44 Direct supply of materialDirect supply of material 0404

Primary Units (Objects) Primary Units (Objects) Expenditure for Works Expenditure for Works

55 Stores supplied from stockStores supplied from stock 0505

66 Freight on storesFreight on stores 0606

77 Credits for released Credits for released materialmaterial

0707

88 OthersOthers 0808

99 Transfer of debits/credits Transfer of debits/credits affecting capital works affecting capital works expenditure/suspense expenditure/suspense accountsaccounts

0909

1010 Productivity Linked Productivity Linked BonusBonus

1010

1111 Excise duty paid/payable Excise duty paid/payable for purchase of materialsfor purchase of materials

1111

1212 Custom DutyCustom Duty 1212

1313 Sales TaxSales Tax 1313

1414 Interim ReliefInterim Relief 1414

1515 Travelling ExpensesTravelling Expenses 1515

1616 Air Travel (Domestic)Air Travel (Domestic) 1616

1717 Air Travel (Foreign)Air Travel (Foreign) 1717

Primary Units (Objects) Primary Units (Objects) Expenditure for Works Expenditure for Works

EARNINGS EARNINGS BUDGET ON BUDGET ON

INDIAN INDIAN RAILWAYSRAILWAYS

WHY EARNINGS BUDGET

is required ?• EARNINGS BUDGET required to EARNINGS BUDGET required to

estimate Cash Surplus after meeting estimate Cash Surplus after meeting WORKING EXPENSES or even to meet WORKING EXPENSES or even to meet Working ExpensesWorking Expenses..

• CASH SURPLUS can be invested on CASH SURPLUS can be invested on projects to improve rail network and projects to improve rail network and provide new lines or connectivity, run provide new lines or connectivity, run additional services, improve passenger additional services, improve passenger amenities etc. amenities etc.

Earning Budget-contd.Earning Budget-contd.

ClassificationsClassifications

Abstract “ X ” Earnings from Passenger Abstract “ X ” Earnings from Passenger traffic and other coaching. (91)traffic and other coaching. (91)

Abstract “ Y ” Earnings from Goods traffic Abstract “ Y ” Earnings from Goods traffic (92)(92)

Abstract “ Z ” Sundry other earnings. (93)Abstract “ Z ” Sundry other earnings. (93)

Railway EarningsRailway Earnings GoodsGoods which is the primary source which is the primary source

accounting for nearly two third (67%)accounting for nearly two third (67%)

COACHING and OTHER COACHNG COACHING and OTHER COACHNG (parcels, special trains, postal, (parcels, special trains, postal, military, Non-Journey tickets)military, Non-Journey tickets)

Accounts for about 30%Accounts for about 30%

SUNDRIESSUNDRIES (land licensing, Right of (land licensing, Right of way, Commercial exploitation of land, way, Commercial exploitation of land, catering and commercial publicity)catering and commercial publicity)

Accounts for about 3%Accounts for about 3%

Earning BudgetEarning Budget Estimates of Earnings prepared taking into Estimates of Earnings prepared taking into

account-account-

Originating earnings and Apportioned Originating earnings and Apportioned Earnings.Earnings.

This includes Adjustments with other Railways This includes Adjustments with other Railways and other Govt. departments.and other Govt. departments.

Physical parametersPhysical parameters Passenger originating, passenger Passenger originating, passenger

kilometers, leadkilometers, lead Loading in million tonnes, NTKM, leadLoading in million tonnes, NTKM, lead

Realization of dues from sundry debtors Realization of dues from sundry debtors (Power houses etc.)(Power houses etc.)

Earnings Budget-contdEarnings Budget-contd Prepared by CCM of the Zonal Prepared by CCM of the Zonal

Railway.Railway.

Prepared separately for passenger, Prepared separately for passenger, other coaching, goods earnings.other coaching, goods earnings.

Sundry earnings- estimates prepared Sundry earnings- estimates prepared by accounts based on information by accounts based on information submitted by engineering branches submitted by engineering branches for non-commercial sundry earnings for non-commercial sundry earnings and for commercial earnings (Catg., and for commercial earnings (Catg., etc), CCM submits the projections.etc), CCM submits the projections.

Earnings Budget - Earnings Budget - contdcontd Estimates for passenger and goods Estimates for passenger and goods

traffic prepared separately under the traffic prepared separately under the headings originating, received and headings originating, received and carried and then the total is cast. carried and then the total is cast.

The detailed working sheet under The detailed working sheet under passenger traffic, goods traffic and passenger traffic, goods traffic and other coaching traffic under the above other coaching traffic under the above headings are sent to the Traffic headings are sent to the Traffic accounts officeaccounts office..

GROSS PASSENGER EARNINGS & RECEIPTS GROSS PASSENGER EARNINGS & RECEIPTS from :from :

Data base is the 6A statistical statement for Data base is the 6A statistical statement for Passenger Earnings generated by EDP Center Passenger Earnings generated by EDP Center from Passenger Classifications (Returns) of from Passenger Classifications (Returns) of previous year and current year. previous year and current year.

CARRIED “Passengers KMS” multiplied by CARRIED “Passengers KMS” multiplied by average fare over the railway = Total Passenger average fare over the railway = Total Passenger EarningsEarnings

Allowance made for additional/reduced traffic Allowance made for additional/reduced traffic during Budget year due to Kumbh Mela, new during Budget year due to Kumbh Mela, new services introduced, stoppage of services due to services introduced, stoppage of services due to Gauge Conversion etc. taken into account.Gauge Conversion etc. taken into account.

Requires vetting of Traffic Accounts.Requires vetting of Traffic Accounts.

Earnings Budget - Earnings Budget - contdcontd

OTHER COACHING • Earnings from Parcel traffic, Military traffic, Earnings from Parcel traffic, Military traffic,

postal vans /RMSpostal vans /RMS

Platform tickets, Clerkage and cancellation Platform tickets, Clerkage and cancellation charges, Cloak room charges, luggage etc.charges, Cloak room charges, luggage etc.

• Seasonal traffic like fruits and traffic potential Seasonal traffic like fruits and traffic potential to be assessed while framing the estimatesto be assessed while framing the estimates

• Estimates are based on previous year’s Estimates are based on previous year’s actuals, actuals,

trends in the first few monthstrends in the first few months

GOODS EARNINGS• Statistical Statement 7A is the basis Statistical Statement 7A is the basis

• Commodity-wise GTKMs and NTKMs considered Commodity-wise GTKMs and NTKMs considered

• Originating tonnage is fixed by the Board in consultation Originating tonnage is fixed by the Board in consultation with the Zonal Rlyswith the Zonal Rlys

• Originating tonnage converted to carried tonnes by Originating tonnage converted to carried tonnes by applying the ratio of originating to carried tonnesapplying the ratio of originating to carried tonnes

• Average rate and average lead is taken from Statement Average rate and average lead is taken from Statement 7A 7A

NTKMs = Carried tonnes X avearge lead in kms.NTKMs = Carried tonnes X avearge lead in kms.

• Goods earnings is obtained by multiplying NTKMs Goods earnings is obtained by multiplying NTKMs with average freight rate.with average freight rate. Miscellaneous earnings are Miscellaneous earnings are also addedalso added

SUNDRIES

Rent recovered from staff quarters,Rent recovered from staff quarters, Advertisement charges, catering Advertisement charges, catering

earnings, earnings, Interest and maintenance charges of Interest and maintenance charges of

Sidings form part of sundry earningsSidings form part of sundry earnings Estimated on lump sum basis- based Estimated on lump sum basis- based

on the past actuals and present trendson the past actuals and present trends

BUDGETARY EXERCISES REVIEW THE IMPACT OF MEASURES INTRODUCED.

Factors to be considered….Factors to be considered….

• DYNAMIC PRICE POLICY – peak and non-peak seasonsDYNAMIC PRICE POLICY – peak and non-peak seasons

• DIFFERENT WHARFAGE RATES FOR busy and non-busy DIFFERENT WHARFAGE RATES FOR busy and non-busy GOODS TERMINALSGOODS TERMINALS

CONCESSIONS TO PASSENGERS TO INCREASE CONCESSIONS TO PASSENGERS TO INCREASE VOLUMESVOLUMES

• CHANGES IN CLASSIFICATION OF COMMODITIES TO CHANGES IN CLASSIFICATION OF COMMODITIES TO ATTRACT ROAD TRAFFICATTRACT ROAD TRAFFIC

• EMPTY FLOW DIRECTION FREIGHT DISCOUNT SCHEMEEMPTY FLOW DIRECTION FREIGHT DISCOUNT SCHEME

• INCREASE IN FREE TIME & REDUCED WHARGFAGE AT INCREASE IN FREE TIME & REDUCED WHARGFAGE AT SMALL TERMINALSSMALL TERMINALS

OPERATING RATIOOPERATING RATIO Measure of the efficiency of operations Measure of the efficiency of operations

on annual basison annual basis Is an input/output ratioIs an input/output ratio Ratio of Total working expenses to Ratio of Total working expenses to

Gross Traffic ReceiptsGross Traffic Receipts An OR of 100% represents break evenAn OR of 100% represents break even OR of less than 100% means there is OR of less than 100% means there is

surplus generationsurplus generation OR of more than 100% means LossesOR of more than 100% means Losses In the current year (2010-11 for SWR)In the current year (2010-11 for SWR) OR is 97.78%OR is 97.78%

Road AheadRoad Ahead

Best utilization of ManpowerBest utilization of Manpower Cheapest rates in tendersCheapest rates in tenders Simplification of proceduresSimplification of procedures Clear estimation of cash and debitsClear estimation of cash and debits Prudent investment for capacity de-Prudent investment for capacity de-

bottlenecking/ expansion.bottlenecking/ expansion. Critical financial appraisalCritical financial appraisal Critical examination of each items of Critical examination of each items of

expenditure to reduce it to the extent expenditure to reduce it to the extent possible without affecting earnings, possible without affecting earnings, quality and safetyquality and safety

Where the Rupee Came Where the Rupee Came FromFrom

Goods Traffic Earnings – 64 paiseGoods Traffic Earnings – 64 paise

Passenger Earnings – 29 paisePassenger Earnings – 29 paise

Other Coaching Earnings – 2 paiseOther Coaching Earnings – 2 paise

Sundry Earnings – 2 paiseSundry Earnings – 2 paise

Misc. Receipts – 3 paiseMisc. Receipts – 3 paise

Where the Rupee WentWhere the Rupee Went

Staff Wages and Allowance – 35 paiseStaff Wages and Allowance – 35 paise Fuel – 18 paiseFuel – 18 paise Pension – 14 paisePension – 14 paise Lease Charges – 9 paiseLease Charges – 9 paise DRF – 6 paiseDRF – 6 paise Stores – 6 paiseStores – 6 paise Misc. – 9 paiseMisc. – 9 paise DF – 2 paiseDF – 2 paise Dividend – 1 paiseDividend – 1 paise

Apr 15, 2023Apr 15, 2023 Contract ManagementContract Management 6767

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