Railway Minister Lalu Prasad’s proud declaration, made while presenting the Railway Budget this February, that Indian Railways (IR) would generate a cash surplus before dividend of Rs 20,000 crore in 2006-07 has turned out to be inflated. An investigation by The Indian Express has revealed that the IR ‘earned’ Rs 2,690 crore — or 13.3 per cent of the declared surplus (Rs 20,153.49 crore) — not by transporting more people or goods, but by changing its accounting procedures.

Replying to a right to information (RTI) application made by The Indian Express, the Railway Ministry has conceded that three accounting policy changes made by IR increased its surplus by Rs 2,689.97 crore in 2006-07. Excluding this amount, the 2006-07 cash surplus would fall to Rs 17,463.5 crore — a smaller increase over the 2005-06 figure of Rs 14,700 crore.

While two of these changes got a line in Lalu’s Budget speech, the third — the biggest contributor to the Rs 2,689.97 crore swell — didn’t even get a mention. Railway Board financial commissioner Sudha Chobe did not respond to an appointment request or a questionnaire sent by us on the accounting changes relating to three entries:-

Lease charges payable to IRFC (Rs 1,720.12 crore): IR leases rolling stock from Indian Railways Finance Corporation (IRFC) and pays lease charges. Earlier, IR used to book this amount to its working expenses. From 2005-06, though, it started booking the capital component of lease charges as capital expenditure sourced through a Capital Fund. Simply put, as an asset, rather than an expense.

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