Railways spent much less on replacing old tracks than CAG estimated: Data

With questions being asked of its track maintenance following the horrific accident in Balasore on Friday, Indian Railways has said that it spent ₹13,523 crore from a non-lapsable Rashtriya Rail Sanraksha Kosh (RRSK) on replacing old tracks (track renewals) in 2020-21, although the number was still short by ₹44,936 crore of the amount the Comptroller and Auditor General of India (CAG) estimated would be needed for the purpose.

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In its 23rd report of 2022, the government’s auditor said the Railways’ Depreciation Reserve Fund (DRF) meant for replacement and renewal of assets was “insufficient”; that only ₹671.92 crore was spent from the fund 2020-21 even as ₹58,459 crore was required for track renewals alone that year.

To be sure, the Balasore accident is believed to have been caused by a malfunction of or interference with either a signal or an interconnection or both, according to a preliminary report. Only a detailed investigation can ascertain the reason for the crash involving three trains that resulted in the deaths of at least 275 people. And to be sure, not all overage tracks are unsafe or unusable.

Government officials, who asked not to be named, said that the actual trend of expenditure on track renewal on Indian Railways has increased from ₹47,039 crore between 2004-05 and 2013-14 to ₹1,09,023 crore between 2014-15 to 2023-24 (budget estimates), reflecting an increase of over 100%. But the government’s auditor still found the spends wanting. Data from the Centre for Monitoring Indian Economy (CMIE) also suggested that some of the increase may have been caused by higher costs.

Railways maintains DRF for replacement and renewal of assets, the CAG report said. “During 2020-21, ₹400 crore was appropriated against the BE of ₹1,000 crore and ₹671.92 crore spent from the fund. The amount is insignificant compared to the actual amount required for the renewal and replacement of over aged assets,” it said.

“The ‘throw forward’ value of assets to be replaced from DRF (up to 2020-21) was estimated at ₹94,873 crore. This mainly included ₹58,459 crore on track renewals, ₹26,493 crore on rolling stock, ₹3,035 crore on bridge works, tunnel works and approaches, ₹1,801 crore on signalling and telecommunication works and ₹815 crore on workshops including production units. Thus, there is huge backlog of renewal and replacement of over aged assets, which needs to be replaced timely, for efficient running of trains,” the report added.

Replying to a query raised by HT , the railway ministry quoted its reply to CAG: “Since the operation of Rashtriya Rail Sanraksha Kosh (RRSK) in 2017-18, provisioning under DRF is minimal. Most of the burden of renewal and replacement with safety implications is being borne by RRSK. The combined allocation under DRF and RRSK is considered adequate to cater to the renewal and replacement needs of Railways.”

The CAG report, however, said: “Audit observed that by funding replacement and renewal of assets through RRSK instead of DRF, railways have reduced the appropriation to DRF, thereby presenting the working expenses and operating ratio in a better light.”

It added: “The provision made to the fund for replacement and renewal of assets is inadequate. This has steadily decreased during the last five years and was insufficient to meet the requirements. There is every possibility and especially in the background of depleting surplus, that replacement and renewal of over aged assets could become a burden for the Government of India.”

The railway ministry on Monday said that the government, in 2017, set up a dedicated non-lapsable fund, RRSK, with a corpus of ₹1 lakh crore to be utilised over a period of five years starting 2017-18, for critical safety related work. According to the data made available by the railways, the national transporter spent more than ₹1 lakh crore on RRSK work from 2017-18 to 2021-22 and also extended the fund’s validity by another five years in February 2022 ( starting 2022-23).

Railway officials familiar with the matter also said that the expenditure on the track renewal saw steady growth from 2017-18, when it was ₹8,884 crore to Rs. 13,533 crore in 2020-21. This further increased to Rs.16,558 crore in 2021-22.

“In total, the national transporter spent ₹58,045 crore on track renewal, during this period,” one of the officials added.

Specifying that the CAG report that was laid on the table on December 21 last year, covers only a limited period, the official, who asked not to be named, said: “The coverage of RRSK utilisation in the CAG report is limited to three years – 2017-18, 2018-19 and 2019-20. Hence, it gives a partial picture on actual expenditure that has been undertaken on both track renewal as well as safety related work by Indian Railways.”

The railways will be sending a detailed reply on all issues raised in this report shortly, this official added.

The government officials cited in the first instance also said that the expenditure on safety related work ( track renewal, bridges, level crossing, rail overbridges /rail under bridges, signalling work) increased from ₹70,274 crore between 2004-05 and 2013-14 to ₹1,78,012 crore between 2014-15 and 2023- 24 (budget estimates), reflecting an increase of more than two and a half times.

But nominal spending numbers on track renewals could be misleading.

CMIE has data on kilometres of track renewals up to 2021-22 and the money spent on track renewals up to 2023-24. An analysis of the length of track renewals shows that this number reached its peak of 5,566km in 2004-05 and fell steadily to reach a low of just 2,424km in 2014-15. This number gradually started increasing under the current government to reach 4,500km in 2019-20. However, it fell again in 2020-21 (likely on account of the pandemic) and 2021-22.

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While the budgetary allocation for track renewals – CMIE has these numbers under total investments by the railways – shows a very sharp increase under the term of the present government, the numbers on kilometres of track renewed shows that the nominal spending is more on account of a rise in costs than an increase in the quantum of physical tracks renewed. The amount spent on track renewal was ₹74 lakh per kilometre in 2004-05, increased to ₹1.73 crore per kilometre in 2013-14 and was at ₹3.3 crore per kilometre in 2021-22, the latest period for which data is available on amount of track renewed. This underlines the fact that caution should be observed while reading too much into nominal allocations for track renewal.