CAG flags lapses worth ₹573 crore in Indian Railways

The Comptroller and Auditor General of India (CAG) flagged lapses worth ₹573 crore in the Railways as detailed in the ‘Union Government (Railways) – Compliance Audit Report’ tabled in Lok Sabha on Monday (July 21, 2025).

The report contains 25 audit observations including shortfalls in revenue recovery, and execution of projects across multiple zones. The instances mentioned in this report came to notice in the course of test audit conducted up to financial year 2022-23.

One of the most expensive lapses for Railways was the Northern Railway’s non-compliance with Railway Board directives to recover licence fee at the rate of 6% of land value from five government-aided schools, which led to short recovery of licence fee of ₹148.61 crore.

Another costly shortfall involved nine railway zones being unable to recover ₹55.51 crore during the period from January 2015 to March 2024 towards District Mineral Foundation (DMF) in the interest and benefit of persons and areas affected by mining-related operations. Contribution towards DMF is supposed to be deducted from contractors along with royalty, in case the same is not paid by the contractor.

The report notes that non-realisation of shunting charges for shunting activity by using railway engines at Bina Siding of East Central Railway resulted in non-realisation of ₹50.77 crore from the siding owner between April 2020 and March 2023.

Also, the Southern Railway planned in May 2015 to replace 28 Nilgiri Mountain Railway (NMR) meter gauge coaches. The Ministry of Railways advised Integral Coach Factory (ICF) to design and develop a prototype coach. ICF manufactured 28 NMR coaches and delivered these between March 2019 and March 2021 to the Southern Railway at a cost of ₹27.91 crore. “ICF did not comply with the instructions of MoR (Ministry) in developing a prototype coach in consultation with Research, Design and Standards Organisation which led to creation of ineffective and deficient assets at a cost of ₹27.91 crore as NMR coaches were not put to effective use even after three years of manufacturing,” the report states.

South Eastern Railway supplied unfit or unloadable wagons along with fit wagons to Ultratech Cement Limited Siding at Dhutra and Orissa Cement Limited Siding at Rajgangpur. These defective wagons were allowed to run empty along with fit wagons in the outward rakes for different locations. As a result, South Eastern Railway could not earn potential freight to the tune of ₹10.25 crore for these defective empty wagons during 2021-22 and 2022-23.

Non-implementation of the revised rate of electricity charges of various State Electricity Boards (SEBs) for recovery from the occupants of railway quarters in Dhanbad Division of East Central Railway resulted in short recovery of ₹14.89 crore.

Even after poor patronage of an express train between Satya Sai Prasanthi Nilayam (SSPN) station and KSR Bengaluru City (SBC) station, which was repeatedly reported by Bengaluru (SBC) Division, South Western Railway (SWR) continued its operation. “This resulted in loss of ₹17.47 crore on its running during the period from 2017-18 to 2022-23,” the report notes.

In violation of stipulated provisions, Northeast Frontier Railway administration accepted higher rates for procurement of machine-crushed track ballast ignoring the last accepted rates prevailing in the same area. This resulted in undue benefit of ₹9.40 crore to the contractor due to procurement at a higher rate.

Delayed implementation of directives in Western Railway over three routes for more than two years led to lower loading of commodities worth 51,453 tonne in rakes resulting in revenue loss of ₹6.17 crore during the period from June 2021 to September 2023. “In one other such route, these directives were yet to be implemented. As a result, 23,817 tonnes of commodity could not be loaded in rakes resulting in loss of revenue of ₹6.45 crore during the period from April 2022 to September 2023,” the report notes.

The report further notes that to garner additional traffic, concession in freight rates was allowed by the Railways under the Station-to-Station Rates (STS) scheme. The Railway Board issued comprehensive guidelines, which specifically instructed the zonal railways to ensure that this concession results in increased freight traffic and the consignees should not be able to take concession in the name of new traffic by changing the loading point or by diverting the existing traffic. However, the Southern Railway administration sanctioned ineligible concession resulting in loss of ₹11.02 crore to the Railways.

Also, the report states that the Eastern Railway failed to implement the Railway Board’s instructions and provisions of Memorandum of Understanding (MoU) for construction of a road over bridge (ROB). As a result, the State government’s share to the extent of ₹13.52 crore could not be realised even after commissioning of the ROB.