Earnings - Comptroller and Auditor General of India

Report No.6 of 2006 (Railways)2.1.4 Northeast Frontier: Injudicious extension of Inter CityRailwayExpress train serviceInjudicious decision of Railway Administration to extend the Inter CityExpress train from Tinsukia to Ledo resulted in loss of Rs.12.19 crorePrior to July 2002, Inter City Express train (5603/ 5604) was plying betweenGuwahati (GHY) and New Tinsukia (NTSK) covering a distance of 505 kms.Considering the demand from local rail users for a convenient over night trainupto Ledo (58 km beyond NTSK), Railway Board approved (June 2001) theproposal of the Railway Administration (May 2001) for extension of servicesof the Inter City Express train from NTSK to Ledo with effect from 1 July2002. This was in addition to the two pairs of passenger trains (905/ 906 and907/908) already plying in this section.Dibrugarh NewTown Tinsukia TinsukiaSripuriagaonNamrupMakum JnDigboiChaparmukh Jn.MarianiJn.FurkatingJn.MargheritaLedoGuwahati Jn Lumding Jn. DimapurNOT TO SCALEDistance from New – Tinsukia to LedoNew–Tinsukia – Makum Jn. = 12 kms.Makum Jn. – Ledo = 46.12 kms.Prudent financial management requires that every investment should bedecided on the basis of profitability/ break-even points, as pointed out in ParaNo.2.1.8 of the Comptroller and Auditor General’s Railway Audit ReportNo.9 of 1998 regarding ‘Economics of Running Shatabdi Trains’.Scrutiny of records by Audit revealed that Railway Administration had neitherconducted any cost analysis or sensitivity analysis nor had the Break EvenPoint been worked out prior to the extension of the Inter City Express train.Further, no effort was made to watch the profitability of the train after itsextension. During the period from July 2002 to February 2005, while the costof operation for running this train in this section was Rs.12.63 crore, the actualearnings amounted to Rs.0.44 crore only, resulting in loss of Rs.12.19 crore.Contrary to the Railway Administration’s projection that a significant portionof the bus travellers would shift to rail travel resulting in good occupancy, thetraffic did not materialise due to existence of well-developed parallel roadservices. Audit scrutiny revealed that the average occupancy in respect of twopairs of passenger trains (905/ 906 and 907/ 908), already running in theNTSK–Ledo–NTSK section, was only 41.71 per cent as compared to 100 percent occupancy in respect of luxury buses plying in this section.The injudicious decision of the Railway Administration to extend the InterCity Express train from NTSK to Ledo without conducting proper feasibility26