CAG exposes alleged irregularities that cost Railways Rs 2486 cr

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Railways suffered revenue loss of about Rs 2486.68 crore due to irregular grant of concessional tariff rate for booking of iron ore traffic during 2008-12, the Comptroller and Audit General has claimed, pointing to "misuse" of dual pricing.

According to CAG report, Railways allowed 358 parties to avail domestic rate for transportation of iron ore despite non-submission/partial submission of the prescribed documents which resulted in revenue loss to the cash-strapped national transporter.

Due to the dual pricing introduced from May 2008, the cost of transportation of iron ore for export was on an average more than three times the cost of the transportation for domestic use.

However, CAG observed a number of deficiencies like booking of iron ore at domestic rate without obtaining any of the prescribed documents.

While 153 parties did not submit any prescribed documents to avail domestic rate for carrying iron ore, 205 parties submitted some of the documents required for the concessional rate.

Railways allowed 153 parties to avail the domestic rate without submitting any of the prescribed documents before booking and delivery of 699 rakes carrying iron ore during May 22, 2008 to March 31, 2012.

This resulted in revenue loss Rs 258.38 cr during the last four years between 2008 and 2012, CAG report submitted today in parliament said.

This indicates a weak internal control system, the report stated.

The CAG has found that 205 parties availed the domestic rate without submitting some of the essential documents like the monthly excise returns, industrial entrepreneur certificate, affidavit, indemnity bonds.

According to the report, 205 parties availed booking and delivery of 6306 rakes carrying iron ore during May 2008 to March 2012. Railways permitted these parties to avail of the domestic rate despite non-submission of some of the essential prescribed documents resulting revenue loss of Rs 2228.30 cr.

CAG observed that the quantity of iron ore transported by rail for export declined by 44 per cent during the period 2008-09 to 2011-12. In fact by 2011, iron ore and earned 55 per cent of the freight earnings from iron ore.

Thus, prudency demanded that adequate safeguards in the form of procedures and checks be put in place against misuse of the dual pricing in iron ore traffic, it said.

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