Indian Railways Budget - full coverage - Revenue Budget, Capital Budget and Earning Budget by Shri S.Chandra Sekhar, CFO/HMRDC

1. Railway Budget
Welcome to an overview & interactive session on
…. by
S. Chandra Sekhar,
Chief Financial Officer/HMRDC,
Bangalore .

2. Budget and Budgetary ControlBudget and Budgetary Control
• Statement of estimated receipts and expenditureStatement of estimated receipts and expenditure
for the ensuing yearfor the ensuing year
• Annual financial statement or PlanAnnual financial statement or Plan
• Vital link in the overall Planning ProcessVital link in the overall Planning Process
• Makes Implementation possible of allMakes Implementation possible of all
programme of a welfare state.programme of a welfare state.

3. Why have a Budget? Role and UtilityWhy have a Budget? Role and Utility
of Budgetof Budget
 Part of Parliamentary Control over Public FinancePart of Parliamentary Control over Public Finance
 Article 112(1) of ConstitutionArticle 112(1) of Constitution
 Mechanism for obtaining prior approval forMechanism for obtaining prior approval for
withdrawal and expenditure from consolidatedwithdrawal and expenditure from consolidated
Fund of IndiaFund of India
 Obtaining prior approval for imposing taxesObtaining prior approval for imposing taxes

4. Besides the Constitutional aspect…Besides the Constitutional aspect…
 Budget helps in :-Budget helps in :-
 Planning, Optimization, setting objectivesPlanning, Optimization, setting objectives
 Communicating complex plans in preciseCommunicating complex plans in precise
quantifiable termquantifiable term
 Delegation by establishing budgets within budgetDelegation by establishing budgets within budget
up to unit levelup to unit level
 Controlling by periodical comparisons and reviewsControlling by periodical comparisons and reviews
and making mid course correctionand making mid course correction
 Facilitates accountabilityFacilitates accountability

5. Structure of a Government BudgetStructure of a Government Budget
 Review of preceding years’ receipts andReview of preceding years’ receipts and
expenditureexpenditure
 Revised estimates for current year based on firstRevised estimates for current year based on first
half year trendshalf year trends
 Estimates for next yearEstimates for next year

6. Structure of a Government BudgetStructure of a Government Budget
 Estimate are separately grouped in respect of capitalEstimate are separately grouped in respect of capital
and Revenueand Revenue
 Estimate are separately dealt with in respect of votedEstimate are separately dealt with in respect of voted
and charged expenditureand charged expenditure
 Charged expenditure – not put to vote Article 113( 1 )Charged expenditure – not put to vote Article 113( 1 )
 Example of charged expenditureExample of charged expenditure – salary and– salary and
allowances of CAG, expenditure to fulfill decreetalallowances of CAG, expenditure to fulfill decreetal
amount, any other amount declared as charged byamount, any other amount declared as charged by
ConstitutionConstitution
 Voted expenditure – Art 113(2) – requires vote ofVoted expenditure – Art 113(2) – requires vote of
ParliamentParliament
 Anything which is not charged is voted.Anything which is not charged is voted.

7. Essentials of a budgetEssentials of a budget
 Budget is a legislation – Finance and AppropriationBudget is a legislation – Finance and Appropriation
Bills. It is at once a financial & political document.Bills. It is at once a financial & political document.
 Budget should reflect strategy/ideology/ philosophyBudget should reflect strategy/ideology/ philosophy
and vision.and vision.
 It should offer a roadmap in the short & mediumIt should offer a roadmap in the short & medium
term towards a vision in the long termterm towards a vision in the long term
 Budget should provide continuity and confidence toBudget should provide continuity and confidence to
all constituencies.all constituencies.
 Budget should address both short term and longBudget should address both short term and long
term imperatives and not be a ritualistic incrementalterm imperatives and not be a ritualistic incremental
exercise.exercise.

8. RAILWAY BUDGETRAILWAY BUDGET
 Separated from General Budget in 1924Separated from General Budget in 1924
 Ackworth Committee Recommendations –Ackworth Committee Recommendations –
separation conventionseparation convention
 Railway Convention CommitteeRailway Convention Committee

9. Railway BudgetRailway Budget
 Annual Financial Statement i.e. an estimate ofAnnual Financial Statement i.e. an estimate of
Receipts and expenditure for the year.Receipts and expenditure for the year.
 As per Article 112(1) of the Constitution it shouldAs per Article 112(1) of the Constitution it should
be laid before both Houses of Parliament forbe laid before both Houses of Parliament for
consideration and sanction of voted portion.consideration and sanction of voted portion.
Charged expenditure-Appropriations sanctioned byCharged expenditure-Appropriations sanctioned by
President.President.
 It is also a Management Document.It is also a Management Document.

10. Salient Features of RailwaySalient Features of Railway
Budget - StructureBudget - Structure
 Expenditure classified byExpenditure classified by activityactivity groupsgroups
- called Demands for Revenue Expenditure- called Demands for Revenue Expenditure
- called Plan Heads for capital Expenditure- called Plan Heads for capital Expenditure
 Revenue Demands are 1 to 15Revenue Demands are 1 to 15
 Capital Demand is No 16Capital Demand is No 16

11. Railway BudgetRailway Budget
 Can we see a similar national will and visionCan we see a similar national will and vision
reflected in the Railway Budget in the last 12reflected in the Railway Budget in the last 12
years? –years? – Obviously no.Obviously no.
 Railway budget have been merely balancingRailway budget have been merely balancing
exercisesexercises
 Stuck in outdated paradigm (example/ model/Stuck in outdated paradigm (example/ model/
pattern/ prototype), held back by past glory.pattern/ prototype), held back by past glory.
 No reform agenda, just incrementalNo reform agenda, just incremental

12. However things appear to beHowever things appear to be
changing in IR – Why?changing in IR – Why?
 PSU’s are getting dismantled – No more captivePSU’s are getting dismantled – No more captive
customer bankscustomer banks
 Leads are falling due to new trade flows and importLeads are falling due to new trade flows and import
deregulation & developmentderegulation & development
 Roads are making rapid progressRoads are making rapid progress
 Air travel costs are dropping with technology breakAir travel costs are dropping with technology break
through and deregulationthrough 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 IR.Leading to all round expectation of reform in IR.

13. Railway BudgetRailway Budget
 Constitutional ProvisionsConstitutional Provisions
 Democratic System of GovernmentDemocratic System of Government
 LegislatureLegislature
 ExecutiveExecutive
 JudiciaryJudiciary

14. Railway Budget - contd.Railway Budget - contd.
 Parliamentary control over expenditureParliamentary control over expenditure
 Approval to demands for grant by variousApproval to demands for grant by various
ministriesministries
 Approval to appropriation accounts afterApproval to appropriation accounts after
examination by Public Accounts committeeexamination by Public Accounts committee
 No expenditure possible without budget exceptNo expenditure possible without budget except
contingenciescontingencies

15. The Railway Budget - contdThe Railway Budget - contd
 The financial forecast in the Budget isThe financial forecast in the Budget is
related to performance targets set for therelated to performance targets set for the
Railway AdministrationsRailway Administrations
 Performance Budget is part of BudgetPerformance Budget is part of Budget
documentdocument

16. Compilation LevelsCompilation Levels
o Department WiseDepartment Wise
o Divisions/workshopsDivisions/workshops
o Zonal HQsZonal HQs
o Railway BoardRailway Board

17. Approval of MRApproval of MR
 Documents are submitted to the Hon’ble Minister for RailwaysDocuments are submitted to the Hon’ble Minister for Railways
for approval after clearance from Ministry of Finance &for approval after clearance from Ministry of Finance &
Planning Commission for Plan expenditure if the cost exceedsPlanning Commission for Plan expenditure if the cost exceeds
100crs.100crs.
 Approval of extended Board (EB) is taken for projects costingApproval of extended Board (EB) is taken for projects costing
over prescribed limit before these can be included in Pinkover prescribed limit before these can be included in Pink
Book and approval of MR is taken. Members of EB areBook and approval of MR is taken. Members of EB are
Secretary Planning Commission, Secretary Expenditure,Secretary Planning Commission, Secretary Expenditure,
Secretary Ministry of Programme Implementation and FullSecretary Ministry of Programme Implementation and Full
Board.Board.
 Works/proposals more than Rs.50 lakhs, is approved byWorks/proposals more than Rs.50 lakhs, is approved by
Hon’ble MR before inclusion in the Pink BookHon’ble MR before inclusion in the Pink Book

18. Presentation to ParliamentPresentation to Parliament
 The complete set of budget papers containingThe complete set of budget papers containing
detailed estimates of each Railway along withdetailed estimates of each Railway along with
summary are presented to Parliament.summary are presented to Parliament.
 Recommendations of President under ArtRecommendations of President under Art
113(3) of the Constitution is obtained before113(3) of the Constitution is obtained before
the Budget is presented to parliament.the Budget is presented to parliament.

19. Approval by parliamentApproval by parliament
 Budget is a money Bill. After presentation of BudgetBudget is a money Bill. After presentation of Budget
in Parliament it is reviewed by Standing Committee. .in Parliament it is reviewed by Standing Committee. .
 After Budget is passed by parliament and givenAfter Budget is passed by parliament and given
assent to by President, funds become available toassent to by President, funds become available to
Railway Board.Railway Board.
 Budget orders are issued in two stages-On accountBudget orders are issued in two stages-On account
allotment for April & May and full Budget allotmentallotment for April & May and full Budget allotment
by May-June.by May-June.
 Supplementary Budget presented if neededSupplementary Budget presented if needed

20. Various types of Budget in vogueVarious types of Budget in vogue
 Historical or trend or incremental Budget.Historical or trend or incremental Budget.
Conventional Budget – Incremental inputConventional Budget – Incremental input
orientedoriented
 Performance Budget – output orientedPerformance Budget – output oriented
 Zero Based Budget – Justify all activitiesZero Based Budget – Justify all activities
De NovoDe Novo
 Integrated BudgetIntegrated Budget

21. Who prepares the Budget?Who prepares the Budget?
 Budget preparation is the responsibility of theBudget preparation is the responsibility of the
ExecutiveExecutive
 Respective Departmental Heads must prepareRespective Departmental Heads must prepare
their portionstheir portions
 Accounts Department is responsible for vettingAccounts Department is responsible for vetting
the justification, outlays proposed and forthe justification, outlays proposed and for
compilationcompilation

22. Budgetary Control and ReviewBudgetary Control and Review
 Essential for mid course corrections and optimalEssential for mid course corrections and optimal
utilization of resourceutilization of resource
 First stage is monthlyFirst stage is monthly budgetary reviewbudgetary review
 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 February/MarchViolent modification - End of February/March

23. Budgetary Control and ReviewBudgetary Control and Review
 Closing of Cash Accounts – 31Closing of Cash Accounts – 31stst
MarchMarch
 Final Closing – May/JuneFinal Closing – May/June
 Appropriation Account to Parliament vetted byAppropriation Account to Parliament vetted by
CAGCAG - Sept- Sept
 Hence a Budget cycle starts in November ofHence a Budget cycle starts in November of
preceding year and completes in September ofpreceding year and completes in September of
succeeding year – 23 months.succeeding year – 23 months.

24. 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 adjustmentMemorandum explaining the Budget proposals for adjustment
in Freight rates and fares.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 Book)Pink Book I , II ( detailed programme), III (Green 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 YearPerformance Budget, Safety Bulletin, Indian Railway Year
Book & Annual Report, & Accounts and Annual StatisticalBook & Annual Report, & Accounts and Annual Statistical

25. The Budgetary ProcessThe 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 November andActual of receipt & expenditure up to November and
trend for remaining months of current yeartrend for remaining months of current year
 Proposals for meeting requirement of the currentProposals for meeting requirement of the current
year.year.
 Estimate of receipts and expenditure of the comingEstimate of receipts and expenditure of the coming
year.year.
 Revenue Budget through Demands for Grants (D1 toRevenue Budget through Demands for Grants (D1 to

26. Revised GrantsRevised Grants
 Supplementary GrantsSupplementary Grants
 Changes in Budget supplementary grants andChanges in Budget supplementary grants and
Re-appropriation.Re-appropriation.
 Be careful while demanding additional amount.Be careful while demanding additional amount.

27. Revenue & Capital BudgetRevenue & Capital Budget
 For maintenance and operation of servicesFor maintenance and operation of 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 different PlanWorks, M&P, RSP Budget under different Plan
Heads- (D-16).Heads- (D-16).

28. Revenue BudgetRevenue Budget
 Demand 1,2 and 3 are of general nature – on costDemand 1,2 and 3 are of general nature – on cost
or overhead exp.or overhead exp.
 1 and 2 are for Railway Board and attached offices1 and 2 are for Railway Board and attached offices
 Demand 3 is for Zonal RailwayDemand 3 is for Zonal Railway
 Each demand has a two way classification – activityEach demand has a two way classification – activity
and object of expenditureand object of expenditure
 Activity tells why or on what specific activityActivity tells why or on what specific activity
expenditure is incurredexpenditure is incurred
 Object of expenditure or PRIMARY UNIT tells onObject of expenditure or PRIMARY UNIT tells on
what specific objective expenditure is incurredwhat specific objective expenditure is incurred

29. 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 MiscellaneousDemand 11, 12 – Welfare and Miscellaneous
 Demand 13 – Retirement benefitDemand 13 – Retirement benefit
 Demand 14 – Appropriation to Railway FundsDemand 14 – Appropriation to Railway Funds

30. Demand No 15Demand No 15
 This is the Dividend payable to general exchequerThis is the Dividend payable to general exchequer
(Central Government )(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 capital atIs calculated presently at 4% or 5 %of capital at
chargecharge
 Capital at charge is the total loans taken from CentralCapital at charge is the total loans taken from Central
Government cumulatively as “Budgetary Support”Government cumulatively as “Budgetary Support”
 The rate of interest is periodically reviewed by R.C.C.The rate of interest is periodically reviewed by R.C.C.

31. DEMAND NODEMAND NO 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
0404 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

32. Total Working ExpensesTotal Working Expenses
 Sum of ordinary working Expenses andSum of ordinary working Expenses and
appropriation to DRF and Pension Fundappropriation to DRF and Pension Fund
 Allocation to DRF and Pension Fund are costsAllocation to DRF and Pension Fund are costs
that have to be covered/incurred – obligatorythat have to be covered/incurred – obligatory
 Allocation to other funds DF, CF, SF are in theAllocation to other funds DF, CF, SF are in the
nature of appropriation from surplusnature of appropriation from surplus

33. Primary Units (Objects) of ExpenditurePrimary Units (Objects) of Expenditure
0101 Salaries and WagesSalaries and Wages
0202 Dearness Pay and Dearness AllowancesDearness Pay and Dearness Allowances
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

34. 12 Night duty allowances12 Night duty allowances
1313 Other allowancesOther allowances
1414 Fees and honorariaFees and honoraria
1515 Transfer allowanceTransfer allowance
1616 Travelling expensesTravelling expenses
1717 Air Travel Expenses sanctioned in lieu ofAir Travel Expenses sanctioned in lieu of
privilege passesprivilege passes
1818 Office expensesOffice expenses
1919 Rental for P&T telephone and call chargesRental for P&T telephone and call charges
including Trunk callsincluding Trunk calls
2121 Advertising expensesAdvertising expenses
Primary Units (Objects) of Expenditure

35. 2222 UtilitiesUtilities
2323 Rental for office equipment (other thanRental for office equipment (other than
Data Processing)Data Processing)
2424 Printing and stationery includingPrinting and stationery including
PublicationsPublications
2727 Cost of materials from stockCost of materials from stock
2828 Cost of materials-Direct purchaseCost of materials-Direct purchase
3131 Fuel for other than tractionFuel for other than traction
3232 Contractual paymentsContractual payments
3333 Transfer of debitsTransfer of debits
Primary Units (Objects) of ExpenditurePrimary Units (Objects) of Expenditure

36. 3434 Adjustment of Wages on POH and otherAdjustment of Wages on POH and other
repairs from WMS account to Revenue Headsrepairs from WMS account to Revenue Heads
3535 Adjustment of materials on POH and otherAdjustment of materials on POH and other
repairs from WMS to Revenue Headsrepairs from WMS to Revenue Heads
3636 Excise duty paid/payable for purchase ofExcise duty paid/payable for purchase of
materialsmaterials
3737 Customs duty paid/payable for purchase ofCustoms duty paid/payable for purchase of
materials.materials.
3838 Sales Tax paid/payable for purchase ofSales Tax paid/payable for purchase of
materials.materials.
3939 Air Travel (Domestic)Air Travel (Domestic)
4040 Air Travel (Foreign)Air Travel (Foreign)
9999 Other expenses.Other expenses.
Primary Units (Objects) of ExpenditurePrimary Units (Objects) of Expenditure

37. CAPITAL BUDGETCAPITAL BUDGET
 Demand no 16Demand no 16
 Popularly called Pink bookPopularly called Pink book
 Also called Works, Machinery and Rolling StockAlso called Works, Machinery and Rolling Stock
Programme (3 elements)Programme (3 elements)
 Works Programme deals with all proposal forWorks Programme deals with all proposal for
creation or replacement/renewal of Fixed assetscreation or replacement/renewal of Fixed assets

38. Capital BudgetCapital Budget
 Book containing Works, Machinery and RollingBook containing Works, Machinery and Rolling
stock (RSP) programme called Pink Book.stock (RSP) programme called Pink Book.
 Chief Engineer coordinates works programChief Engineer coordinates works program
 Chief Mechanical Engineer co-ordinates theChief Mechanical Engineer co-ordinates the
Machinery and Plant (M&P) Program.Machinery and Plant (M&P) Program.
 Rolling stock coordinated by Railway BoardRolling stock coordinated by Railway Board
through CME.through CME.

39. CAPITAL BUDGETCAPITAL BUDGET
 Rolling stock Programme deals with proposalsRolling stock Programme deals with proposals
regarding moving assets – locos, coaches andregarding moving assets – locos, coaches and
wagonswagons
 Machinery and Plant Programme Deals withMachinery and Plant Programme Deals with
proposals regarding supporting assets –proposals regarding supporting assets –
workshops and maintenance shedsworkshops and maintenance sheds
 CME coordinates for both RSP and M&PCME coordinates for both RSP and M&P
 Allocation is Plans Head WiseAllocation is Plans Head Wise

40. 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

41. Railway FundsRailway Funds
 DRF – Depreciation Reserve FundDRF – Depreciation Reserve Fund
 DF - Development FundDF - Development Fund
 CF - Capital FundCF - Capital Fund
 SF - Safety FundSF - Safety Fund
 PF - Pension FundPF - Pension Fund

42. 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.

43. Non- Budgetary Sources for Capital expenditure.Non- Budgetary Sources for Capital expenditure.
 Market borrowings through IRFC to financeMarket borrowings through IRFC to finance
RSP,M&P items on lease basis.RSP,M&P items on lease basis.
 Built Own and Transfer (BOT) , Built Own andBuilt Own and Transfer (BOT) , Built Own and
Lease and Transfer (BOLT)Lease and Transfer (BOLT)
 National Rail Vikas Yojana projects through RailNational Rail Vikas Yojana projects through Rail
Vikas Nigam Ltd. (RVNL).Vikas Nigam Ltd. (RVNL).

44. Capital Plan HeadsCapital Plan Heads
PlanPlan
HeadsHeads
NameName PlanPlan
HeadsHeads
NameName
1111 New LinesNew Lines 1212 Purchase of newPurchase of new
lineslines
1414 Gauge conversionGauge conversion
1515 DoublingDoubling 1616 Traffic facilities,Traffic facilities,
yard remodellingyard remodelling

45. Capital Plan Heads --contdCapital Plan Heads --contd
PlanPlan
HeadsHeads
NameName PlanPlan
HeadsHeads
NameName
1717 ComputerizationComputerization 1818 RailwayRailway
ResearchResearch
2121 Rolling stockRolling stock 2929 Road SafetyRoad Safety
Works-levelWorks-level
crossingcrossing
3030 Road Safety works-Road Safety works-
Road Over/underRoad Over/under
bridgesbridges
3131 Track renewalsTrack renewals

46. Capital Plan Heads --contdCapital Plan Heads --contd
3232 Bridge worksBridge works 3333 Signalling andSignalling and
Telecomm worksTelecomm works
3434 Taking over lineTaking over line
wires from P&T deptwires from P&T dept
3535 ElectrificationElectrification
projectsprojects
3636 Other electricalOther electrical
worksworks
4141 Machinery and PlantMachinery and Plant
4242 Workshops incl.Workshops incl.
Prodn. unitsProdn. units
5151 Staff quartersStaff quarters

47. Capital Plan Heads ---contdCapital Plan Heads ---contd
5252 Amenities for staffAmenities for staff 5353 Passengers amenitiesPassengers amenities
6262 Inv.in Govt. Comml.Inv.in Govt. Comml.
undertakingundertaking
6464 Other Specified worksOther Specified works
7171 Stores SuspenseStores Suspense 7272 Manufacture suspenseManufacture suspense
7373 MiscellaneousMiscellaneous
advancesadvances
8181 Metropolitan TransportMetropolitan Transport
projectsprojects
8282 Transfer to SRSFTransfer to SRSF

48. Primary Units (Objects) Expenditure for WorksPrimary Units (Objects) Expenditure for Works
11 Pay& allowances of DepartmentalPay& allowances of Departmental
EstablishmentEstablishment
0101
22 Payment to Casual LabourPayment to Casual Labour 0202
33 Payment to contractors and others forPayment to contractors and others for
Engineering works or supply andEngineering works or supply and
erection contracts etc.erection contracts etc.
0303
44 Direct supply of materialDirect supply of material 0404

49. Primary Units (Objects) Expenditure for WorksPrimary Units (Objects) Expenditure for Works
55 Stores supplied from stockStores supplied from stock 0505
66 Freight on storesFreight on stores 0606
77 Credits for released materialCredits for released material 0707
88 OthersOthers 0808
99 Transfer of debits/credits affectingTransfer of debits/credits affecting
capital works expenditure/suspensecapital works expenditure/suspense
accountsaccounts
0909

50. 1010 Productivity Linked BonusProductivity Linked Bonus 1010
1111 Excise duty paid/payable forExcise duty paid/payable for
purchase of materialspurchase 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) Expenditure for WorksPrimary Units (Objects) Expenditure for Works

51. EARNINGSEARNINGS
BUDGET ONBUDGET ON
INDIAN RAILWAYSINDIAN RAILWAYS

52. WHY EARNINGS BUDGET
is required ?
• EARNINGS BUDGET required to estimate CashEARNINGS BUDGET required to estimate Cash
Surplus after meeting WORKING EXPENSES orSurplus after meeting WORKING EXPENSES or
even to meet Working Expenseseven to meet Working Expenses..
• CASH SURPLUS can be invested on projects toCASH SURPLUS can be invested on projects to
improve rail network and provide new lines orimprove rail network and provide new lines or
connectivity, run additional services, improveconnectivity, run additional services, improve
passenger amenities etc.passenger amenities etc.

53. Earning Budget-contd.Earning Budget-contd.
 ClassificationsClassifications
 Abstract “ X ” Earnings from Passenger trafficAbstract “ X ” Earnings from Passenger traffic
and other coaching. (91)and other coaching. (91)
 Abstract “ Y ” Earnings from Goods traffic (92)Abstract “ Y ” Earnings from Goods traffic (92)
 Abstract “ Z ” Sundry other earnings. (93)Abstract “ Z ” Sundry other earnings. (93)

54. Railway EarningsRailway Earnings
 GoodsGoods which is the primary source accountingwhich is the primary source accounting
for nearly two third (67%)for nearly two third (67%)
 COACHING and OTHER COACHNGCOACHING and OTHER COACHNG
(parcels, special trains, postal, military, Non-(parcels, special trains, postal, military, Non-
Journey tickets)Journey tickets)
 Accounts for about 30%Accounts for about 30%
 SUNDRIESSUNDRIES (land licensing, Right of way,(land licensing, Right of way,
Commercial exploitation of land, catering andCommercial exploitation of land, catering and
commercial publicity)commercial publicity)
 Accounts for about 3%Accounts for about 3%

55. Earning BudgetEarning Budget
 Estimates of Earnings prepared taking into account-Estimates of Earnings prepared taking into account-
 Originating earnings and Apportioned Earnings.Originating earnings and Apportioned Earnings.
 This includes Adjustments with other Railways andThis includes Adjustments with other Railways and
other Govt. departments.other Govt. departments.
 Physical parametersPhysical parameters
 Passenger originating, passenger kilometers, leadPassenger originating, passenger kilometers, lead
 Loading in million tonnes, NTKM, leadLoading in million tonnes, NTKM, lead
 Realization of dues from sundry debtors (PowerRealization of dues from sundry debtors (Power
houses etc.)houses etc.)

56. Earnings Budget-contdEarnings Budget-contd
 Prepared by CCM of the Zonal Railway.Prepared by CCM of the Zonal Railway.
 Prepared separately for passenger, otherPrepared separately for passenger, other
coaching, goods earnings.coaching, goods earnings.
 Sundry earnings- estimates prepared bySundry earnings- estimates prepared by
accounts based on information submitted byaccounts based on information submitted by
engineering branches for non-commercialengineering branches for non-commercial
sundry earnings and for commercial earningssundry earnings and for commercial earnings
(Catg., etc), CCM submits the projections.(Catg., etc), CCM submits the projections.

57. Earnings Budget - contdEarnings Budget - contd
 Estimates for passenger and goods trafficEstimates for passenger and goods traffic
prepared separately under the headingsprepared separately under the headings
originating, received and carried and then theoriginating, received and carried and then the
total is cast.total is cast.
 The detailed working sheet under passengerThe detailed working sheet under passenger
traffic, goods traffic and other coaching traffictraffic, goods traffic and other coaching traffic
under the above headings are sent to the Trafficunder the above headings are sent to the Traffic
accounts officeaccounts office..

58. GROSS PASSENGER EARNINGS & RECEIPTS from :GROSS PASSENGER EARNINGS & RECEIPTS from :
 Data base is the 6A statistical statement for Passenger EarningsData base is the 6A statistical statement for Passenger Earnings
generated by EDP Center from Passenger Classificationsgenerated by EDP Center from Passenger Classifications
(Returns) of previous year and current year.(Returns) of previous year and current year.
 CARRIED “Passengers KMS” multiplied by average fare overCARRIED “Passengers KMS” multiplied by average fare over
the railway = Total Passenger Earningsthe railway = Total Passenger Earnings
 Allowance made for additional/reduced traffic during BudgetAllowance made for additional/reduced traffic during Budget
year due to Kumbh Mela, new services introduced, stoppage ofyear due to Kumbh Mela, new services introduced, stoppage of
services due to Gauge Conversion etc. taken into account.services due to Gauge Conversion etc. taken into account.
 Requires vetting of Traffic Accounts.Requires vetting of Traffic Accounts.
Earnings Budget - contdEarnings Budget - contd

59. OTHER COACHING
• Earnings from Parcel traffic, Military traffic, postalEarnings from Parcel traffic, Military traffic, postal
vans /RMSvans /RMS
 Platform tickets, Clerkage and cancellation charges,Platform tickets, Clerkage and cancellation charges,
Cloak room charges, luggage etc.Cloak room charges, luggage etc.
• Seasonal traffic like fruits and traffic potential to beSeasonal traffic like fruits and traffic potential to be
assessed while framing the estimatesassessed while framing the estimates
• Estimates are based on previous year’s actuals,Estimates are based on previous year’s actuals,
trends in the first few monthstrends in the first few months

60. GOODS EARNINGS
• Statistical Statement 7A is the basisStatistical Statement 7A is the basis
• Commodity-wise GTKMs and NTKMs consideredCommodity-wise GTKMs and NTKMs considered
• Originating tonnage is fixed by the Board in consultation with the Zonal RlysOriginating tonnage is fixed by the Board in consultation with the Zonal Rlys
• Originating tonnage converted to carried tonnes by applying the ratio ofOriginating tonnage converted to carried tonnes by applying the ratio of
originating to carried tonnesoriginating to carried tonnes
• Average rate and average lead is taken from Statement 7AAverage rate and average lead is taken from Statement 7A
 NTKMs = Carried tonnes X avearge lead in kms.NTKMs = Carried tonnes X avearge lead in kms.
• Goods earnings is obtained by multiplying NTKMs with averageGoods earnings is obtained by multiplying NTKMs with average
freight rate.freight rate. Miscellaneous earnings are also addedMiscellaneous earnings are also added

61. SUNDRIES
 Rent recovered from staff quarters,Rent recovered from staff quarters,
 Advertisement charges, catering earnings,Advertisement charges, catering earnings,
 Interest and maintenance charges of SidingsInterest and maintenance charges of Sidings
form part of sundry earningsform part of sundry earnings
 Estimated on lump sum basis- based on theEstimated on lump sum basis- based on the
past actuals and present trendspast actuals and present trends

62. 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 GOODSDIFFERENT WHARFAGE RATES FOR busy and non-busy GOODS
TERMINALSTERMINALS
 CONCESSIONS TO PASSENGERS TO INCREASE VOLUMESCONCESSIONS TO PASSENGERS TO INCREASE VOLUMES
• CHANGES IN CLASSIFICATION OF COMMODITIES TOCHANGES 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 ATINCREASE IN FREE TIME & REDUCED WHARGFAGE AT
SMALL TERMINALSSMALL TERMINALS

63. OPERATING RATIOOPERATING RATIO
 Measure of the efficiency of operations on annualMeasure of the efficiency of operations on annual
basisbasis
 Is an input/output ratioIs an input/output ratio
 Ratio of Total working expenses to Gross TrafficRatio of Total working expenses to Gross Traffic
ReceiptsReceipts
 An OR of 100% represents break evenAn OR of 100% represents break even
 OR of less than 100% means there is surplusOR of less than 100% means there is surplus
generationgeneration
 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%

64. 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-bottlenecking/Prudent investment for capacity de-bottlenecking/
expansion.expansion.
 Critical financial appraisalCritical financial appraisal
 Critical examination of each items of expenditure toCritical examination of each items of expenditure to
reduce it to the extent possible without affectingreduce it to the extent possible without affecting
earnings, quality and safetyearnings, quality and safety

65. Where the Rupee Came FromWhere the Rupee Came From
 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

66. 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

67. Jul 14, 2015Jul 14, 2015 Contract ManagementContract Management 6767
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