FINANCIAL STRUCTRE OF INDIAN RAILWAYS. Sanjay upreti PAM.

FINANCIAL STRUCTRE OF INDIAN RAILWAYS.

Sanjay upreti

PAM

FINANCIAL STRUCTRE OF INDIAN RAILWAYS.

•ACCOUNTAL OF MONEY

•EXPENDITURE ACCOUNTAL

•REVENUE EXPENDITURE

•WORKS EXPENDITURE

•EARNINGS ACCOUNTAL

ACCOUNTAL OF MONEY

1. HOW EARNINGS ARE ACCOUNTED

COLLECTION AT THE

STATIONS

DEPOSIT AT THE BANK

BANK ADVICESRBI/NGP

RBI/NGP CREDITS/INCREASESTHE RLY.’S ACCOUNT

SENDS THE MONEYTO THE CASH

OFFICES

ACCOUNTAL OF MONEY

2. HOW EXPENSES ARE ACCOUNTED

CHEQUE ISSUEDBY RLY.

CHEQUE DEPOSITEDIN BANK BY THE

PARTYBANK GIVES MONEY TO

THE PARTY AND ADVICESRBI/NGP.

RBI/NGP DEBITS/REDUCES RLY.’s ACCOUNT

EARNINGS CFI

WORKS EXP.REVENUE EXP./

WORKING CAPITAL

BUDGETARY ALLOCATION

FINANCIAL STRUCTURE OF RAILWAYS.

&

RELATIONSHIP WITH THE GoI

Commercial AccountingPara 201 of A-1

• Commercial Accounting is done in a manner so as to show:– How capital is utilize. – Its standing with debtors and creditors.– Whether it is gaining or losing.– The reasons for loss and gain.– Whether it is solvent or insolvent.

Government AccountsPara 201 of A-1

• The main requirement of government accounting is to prepare a systematic record of receipt and expenditure.

• Indian Railways is a DEPARTMENTAL COMMERCIAL ENTERPRISE.

• Thus we maintain accounts on commercial basis as well as government basis and then link the two through link accounts.

Para 202 & 205 of A-1

• The accounts of a Railway prepared as in a commercial unit are known as “Capital and Revenue accounts”.

• Accounts prepared for the government are called “ Finance Accounts”.

• To facilitate the preparation of finance accounts a detailed structure of accounts has been developed which synchronies with the government of India Accounting.

CLASSIFICATION / STRUCTURE OF ACCOUNTS

WHAT IS IT?A DETAILED SCHEME OF RECORDING ACCOUNTS

NEED FOR IT?INFO/DATA - MEANINGFUL REPRESENTATION

HELPS ANALYSIS

•ENABLES - DECISIONS BASED ON

COMPARISONSCOST CONTROLSBUDGETINGFORECASTS

REVENUE EXPENDITURE

•DEFININTION

•COMPONENTS

•1. ORDINARY WORKING EXPENSES (Para 324 of F-1)

•2. OTHER MISC. EXPENSES.

•3. APPROPRIATION TION TO FUNDS

•FROM WHERE DO WE GET MONEY FOR REVENUE EXPENSES?

• Relevant References ( Page 1 & 2 of A-2 & Para 701 of F-2)

DEMANDS FOR GRANTS 1. Railway Board makes policies 2. Miscellaneous expenditure common to all 3. RAILWAY ADMINITRATION maintains 4. BUILDINGS & TRACKS to run 5. LOCOMOTIVES and 6. CARRIAGE by using 7. PLANT & EQUIPMENTS to operate 8. ROLLING STOCK by 9. TRAFFIC DETARTMENT using10.FUEL and earn money for11. STAFF WELFARE and12. MISCELLANEOUS EXPENSES.13. PF, Pension & other retirement benefits.14. Appropriation to funds. DRF,Pension15. Dividend, Repayment of loan etc.16. Works expenditure.

FROM 1 TO 12OWE .

FROM 1 TO 14

TWE

FROM1 TO 15

REVENUEEXP

FROM1 TO 16TOTAL

EXP

S U B - D IV IS IO N S O F R E V E N U E D E M A N D S

M IN O R H E A D

D E A TIL E D H E A D D E A TIL E D H E A D

S U B H E A D S U B H E A D

D E A TIL E D H E A D D E A TIL E D H E A D

S U B H E A D

M IN O R H E A D M IN O R H E A D

D E M A N D N O

EACH DEMAND IS DIVIDED INTO :

MINOR HEAD

SUBHEAD

DETAILED HEAD

PRIMARY NO.

THUS EXP. CLASSIFICATION WILL BE

04 220 32

DEMAND No. DETAILED HEAD PRIMARY UNIT

CLASSIFICATION OF WORKS EXP.

• PLAN HEAD--- MINOR HEADS

• 24 TILL 1999 AFTER WHICH 2 NEW HAVE BEEN ADDED--- ROB & RUB UNDER SAFETY WORKS.

• Thus in all 26 plan heads exists.• e.g.• DRF- 2114-09 PROCUREMENT

OF ELEC. LOCO

WORKS EXPENDITURE

DEFINITION

• Rules for classification of expenditure under the various heads are given in chapter 7 of F-1

•FROM WHERE DO WE GET MONEY FOR WORKS EXPENDITURE.

SURPLUS

REVENUEDRF

DF

CAPITAL FUND

CAPITALMONEY FROM EXCHEQUER

WHILE GIVING ALLOCATION OF WORKS EXPENDITURE

WE GIVE

SOURCES OF FUND

&

THEIR APPLICATION

CAP.,CAP.FUND,DRF,DF,

PLAN HEADLIKE DOUBLING,

S&T ETC.

DRF

• STARTED FROM 1.4.1924• PROVIDES FOR COST OF REPLACEMENT

OF ASSETS.• AMOUNT ON THE BASIS OF RCC’s

RECOMMENDATIONS.• SUBJECT TO VOTE OF PARLIAMENT• FOR 2001-2002 Appropriation to DRF has

been Budgeted at Rs.2804 Crores and withdrawal from the fund is kept at 2704 Crores..

DF

• STARTED IN 1946---- BETTERMENT FUND AND RENAMED AS DF FROM 1.4.1950.

• IT IS OF 4 TYPES TYPES• DFI PASSENGER AMENITIES• DF II LABOUR WELFARE• DF IIIUNREMUNERATIVE WORKS FOR

OPERATIONAL EFFICIENCY• DF IVSAFETY WORKS• The appropriation to and withdrawal from the fund

for the year 2001-2002 has been kept at Rs. 511 crores.

CAPITAL FUND

• CREATED IN 1992-93• ALL EXCESS AFTER APPROPRIATION TO

DF IS CREDITED TO THIS.• WITH A VIEW TO CREATE

INFRASTRUCTRE FROM INTERNAL RESOURCES.

• NOW OF NOT MUCH USE• The appropriation to and withdrawal from

the fund for the year 2001-2002 has been kept at Rs. 17.43 crores.

RULES OF ALLOCATION EARNINGS

ABSTRACT X -

COACHING EARNINGS PASSENGER FARES, LUGGAGE CHARGES, PARCEL COLLECTIONS, LIVE STOCK BY PASSENGER TRAINS ETC.

ABSTRACT Y -

EARNINGS FROM GOODS TRAFFIC, GENERAL MERCHANDISE, COAL, FERTILIZERS, LIVESTOCK BY GOODS TRAINS, TRANSHIPMENT CHARGES ETC.

ABSTRACT Z -

SUNDRY OTHER EARNINGS, COLLECTION OF RETIRING ROOM CHARGES, RECEIPTS FROM CATERING DEPT., SALE PROCEEDS OF TREES AND GRASS ON LINE, RENT OF PLOTS GIVEN TO OUTSIDERS, TELEGRAPH EARNINGS ETC.