Railway Convention Committee (An Important Short Notes question)

RAILWAY CONVENTION COMMITTEE     - R C C

1988,1992,1995 (with out Books) & 1987,1990 (with Books)  - short notes

       Þ       is an ad hoc Parliamentary committee constituted from time to time on Resolution adopted by Lok Sabha and concurred in by Rajya Sabha.

       Þ       The appointment and functions of Railway Convention Committee is a part of Parliamentary control over Indian Railway Finances.

       Þ       Composition of RCC - 12 members from Lok Sabha nominated by Speaker and 6 Members from Rajya Sabha nominated by Chairman.

       Þ       The Chairman of the Committee is appointed by the Speaker from amongst the members of the Committee.

      

       Þ       After Independence, first RCC constituted in the year 1949. Since then, each Lok Sabha has been having a Railway Convention Committee.

       Þ        The Committee becomes functus officio after presenting its final Report regarding rate of dividend payable to General Revenues.

       Þ       The Report of the Committee on the Rate of Dividend is considered by the House on a Resolution moved by the Minister of Railways.

       Þ       After a Report has been presented to the House, the Ministry of Railways and other concerned Ministries are required to take action on various observations and recommendations contained in the Report. The replies of the Government are examined and an ATR- Action Taken Report is then presented to the House.

       Þ       is formed once in five years (normally with the formation of New Loksabha)

       Þ       Its rules generally applicable for a period of five years.

       Þ       R C C recommends on the following aspects:

ü Rate of Dividend payable to the General Revenues. (This may not require now, due to merger of Railway Budget with General Budget)

ü Appropriation to the D.R.F.

ü Modification of rules of expenditure allocation between Capital and Revenue.

ü How Rly Surplus (after the payment of Dividend) should be distributed among various Railway Funds.

ü To introduce flexibility in the administration of the Railway finances.

ü Accounting matters and aspects of Management practices on Railways.

ü Express views on Rolling Stock Production and any short earnings and how the same should be overcome.

ü And any other subject matter brought to its notice by the Minister of Railways.

                                   *&*&*&*&

Audit Objections and Draft Para - Very important question

Audit objections draft para & audit para in Indian Railways from Nageswara Rao M

RSF-Railway Safety Fund - Source of Finance

   RSF-Railway Safety Fund

Ø  OBJECT:   (1) Conversion of unmanned level crossings into manned level crossings and (2) Conversion of busy manned level crossings into Grade Separator i.e., ROBRoad Over Bridge/RUB-Road Under Bridge,/FOB-Foot Over Bridge/Sub-way.

Ø Since inception of Railways, there has been policy to provide unmanned level crossings where Train Vehicle Units (TVU) are low and manned if expected TVU is on higher side. 

•  Road Over Bridge can be build over level crossings with Train Vehicle Unit (TVU) more than one lakh provided state government or local body is agreed to share 50 percent cost of the project.

ØAs on date (30.07.2016), Indian Railways have 28607 level crossings out of which,19267 (67 %) are manned and balance 9340 (33%) are unmanned. These unmanned level crossings account for maximum number of consequential train accidents.

                At present Indian Railways has deployed "Gate Mitras" (Gate counsellors) at unmanned Level Crossings on contract basis to avoid casualties.

Ø RSF created w.e.f 01st April, 2001

Ø created based on the recommendations of RCC - Railway Convention Committee, 1999.

Ø It is Non-Interest bearing Fund.

Ø SOURCES:   1.   Surplus after meeting the dividend liability in Railway Revenues.  2. Transfer of funds from CRF - Central Road Fund (12.5 % of CRF - to Railways) by the Central Government.  3. The present contribution 20 % out of the Dividends payable to RSWF - Railway Safety Works fund (operated in the books of Ministry of Finance)

Ø New Plan Head 2900 - for conversion of unmanned level crossings into manned level crossings.

Ø New Plan head 3000 - construction of ROB/RUBs in place of manned level crossings.

SRSF-Special Railway Safety Fund (Closed in year 2008)

ü  Object:   To wipe out the accumulated arrears of renewal of over-aged assets,  especially safety related ones i.e., tracks, bridges, signaling gears and Rolling stock. 

ü  SRSF has been created w.e.f   1st April, 2001  and  closed  from 1st April, 2008.

ü On closing, the balance in SRSF  Rs.597.73 Crores transferred to DRF - Depreciation Reserve Fund.

ü It is Non-lapsable and Non-Interest  bearing Fund.

ü Sources: created with an amount of Rs.17,000 Crores.  Out of this, Rs.12,000 Crores recd. from Finance Ministry in the form of Dividend Free Capital and Rs.5,000 Crores raised through by levying Safety surcharge on Passenger fares w.e.f. 01.10.2001.

ü The Safety surcharge on Passenger fares was discontinued w.e.f 01.04.2007, but subsumed in passenger fares "ON AS IS WHERE IS BASIS" and renamed as Development Fund to the DFC - Dedicated Freight Corridor.

ü carved out of the recommendations of "Railway Safety Review Committee" headed by Justice H.R.Khanna, Retd. Supreme Court Judge in the year 1998.

ü GREEN BOOK -  All SRSF works sanctioned are incorporated in the Book named as GREEN BOOK.

ü Progress/Results of creation of SRSF are mentioned below.

Renewal of	Target	Achieved	Percentage
Tracks	16538 Kms	15624 Kms	94 %
Bridges	2286 Nos	2191 Nos	96 %
Signaling gears	1448 stations	1282 stations	89 %

•  With sustained efforts in the last decade, Indian Railways have reduced the number of accidents per million train kilometers from 0.44 in 2003-04 to 0.13 in 2012-13.

ü  The creation of Second SRSF with an proposed amount of Rs.40,000 Crores is on the news.

ü So it is best time for contemplation as "Is it require SRSF's to the Indian Railways ?"   .  The simple answer is NO, as long as provide sufficient amounts to DRF - Depreciation Reserve Fund for replacement of Railway assets.

ü  Let us observe CAG remarks on SRSF  (CAG report on Railway finances of 2009-10 year)

ü  "Railways need to maintain a reserve with a minimum amount under DRF

accumulation to facilitate the timely execution of renewals with a view to

maintain the assets at the highest standard of efficiency. Accumulation of

arrears in renewal/replacement may at later stage create a need to set up

another fund (as done in the year 2001 when Special Railway Safety Fund was created) to wipe out the arrears of renewal/replacement.

Allocations/Classification of accounts - various practicals given in previous question papers of Appendix III (IREM) exam.

Practicals - Allocations/Classification examples - Previous year question papers

Click below

Allocations - Practicals


Note:

1.These allocations along with answers are contributed by Smt. Chaitali Dasgupta, SSO(A)/Gauhati.  I conveyed thanks to her behalf of all the candidates

2. The veracity/correctness of the allocations may please be checked with the help of given Finance Code Volume II through the link given below.  If at all any corrections, the same may please be brought to the notice of me.  So that the same will be corrected and published.

Finance Code Volume 2

OLWR - No more a Source of Finance in Indian Railways

• Board(FC) has approved abolition of Allocation Head - OLWR - Open Line Works (Revenue). 
• Existing work if any under OLWR, the same may be transferred to DRF or DF as the case may be.
• As Such there is no allotment of Grant under OLWR in Demand NO.16 from the year 2015-16 onwards.
• 
  
• Necessary correction slip to the Accounts Code will be issued on receipt of approval from CGA - Controller General of Accounts and C&AG- Comptroller and Auditor General of India. 
• Reason: Insignificant expenditure under OLWR in Annual Plan of Works Expenditure.  For example in the year 2013-14 -  Rs.28 Crores expenditure under OLWR against huge Budget under Demand No. 16 (approximately around 63,000 Crores)

      Click here for the Railway Board letter on the above subject 

 OLWR - Board's Letter

Allocations - Titbits

Note:

1)   Due to merger of Rly.Budget with General Budget, all Demands 3 to 13 are now subsumed into Single Demand No.80 - Ministry of Railways.  The erstwhile Demands 3 to 13 are now named as Sub Major Heads (SMH) 01 to 11 under Major Head 3002 - Indian Railways Working Expenses (Commercial Lines) respectively. 

2)   Description of Demand/Minor Head/Sub Head/Detailed Head is given for the purpose of understanding.  Need not be furnished in answer sheets.

3)   Sub Head is not asked, yet furnished herein for perusal.

4)   For attempting these type of Allocation questions, hard copy of Finance Code Volume 2 (F2) is must for preparation.  Click for F2

Allocations / Classifications  - TITBITS

• In view of Swach Bharat campaign, the following activities are more important -
•  08 Demand - Operating Expenses - Rolling Stock & Equipement (08-593) -Expenditure on OBHS- On Board Housekeeping services, CTS -Clean Train Station Scheme, Mechanical coach Cleaning, pest & rodent control treatment or any other activity of coach sanitation.

(Authority: Board's letter no.2014/AC-II/2/2 dated 16.10.2014)�acs no.118 . To view letter - click here

http://www.indianrailways.gov.in/railwayboard/uploads/directorate/accounts/downloads/circular/Compendium_2014/34%20(a).pdf

• 09 Demand - Operating expenses - Traffic - 09-0299 - Cleanliness and Sanitation at Stations.(Authority : Board's Letter No. No.2014/ACII/2/2 dated 03.12.14)-acs no.119)
• http://www.indianrailways.gov.in/railwayboard/uploads/directorate/accounts/downloads/circular/Compendium_2014/39-2014.pdf

Ø Single Demand i.e., Demand No. 12 for two abstracts -  One is Abstract –K for Misc.Working Expenses and another is Abstract –N for Suspense.

Ø Demand No. 03 – General Superintendence and Services  - It covers all Officers and Administrative staff of all departments in GM’s Offices as well as DRM’s offices. 

 Exceptions: 1) CCO- Chief Claims Officer and his establishment - allocated to Demand No.12- Misc Working Expenses.    2) CSC – Chief Security Commissioner or DSC – Divisional Security Commissioner and their establishments – allocated to Demand No.12 – Misc Working Expenses..   3) CMD – Chief Medical Director or Sr.DMO – Sr.Divisional Medical Officer and their establishments – allocated to Demand No.11 – Staff Welfare and Amenities.

Ø The Repairs and Maintenance of Plant & Equipment of all Departments – charged to Demand No.7 – Repairs & Maintenance of Plant and Equipments

Ø Payment of compensation claims – Demand No. 12 – Misc Working Expenses

Ø Court fees and other legal expenses – Demand No. 03 – General Superintendence & Services.  ( 03-164)

Ø Expenditure on Sports & Cultural activities and connected establishment – Demand No. 03 - General Superintendence & Services. ( 03-330)

Ø Conservancy of Rivers  -  Demand No. 04 – Repairs & Maintenance of P.Way & works.

Ø Planting  & upkeep of trees along Railway lines, Station gardens, Staff colonies   - Demand No. 04 – Repairs and Maintenance of P.Way & Works.

Ø Consumable items such as lubricants, carbon brushes, lamps, bolts etc used for coaches/wagons ( by Divisions in Open Line)-  Demand No. 08- Operating Expenses - Rolling Stock.  If the same were used in Workshops, allocated to Demand No. 06- Repairs & Maintenance of Carriages & Wagons.

Ø Repairs to watches, clocks, time recorders, stop watches ( in stations, offices etc)  - Demand No. 07 – Repairs & Maintenance of Plant and Equipments.  Why because all these items are treated as tools & plants as per Railway’s Lingo/jargon.

Ø Payment of Lease charges (of IRFC, etc) – Demand No. 09 – Operating Expenses (Traffic).  Only Interest portion charged to Demand No. 09. The Principal portion of Lease charges should be charged to Plan Head 2200 – Leased Assets under Demand No.16

Ø Demand No. 16 -Plan Head 1300- Restoration of Dismantled lines – abolished by Railway Board recently.   

CLASSIFICATION OF REVENUE EXPENDITURE

Category	Group	Erstwhile Demand No.	Abstract	Name of demand
I.	Policy Formulation and Services Common to all Railways	1.		Railway Board
		2.		Miscellaneous Expenditure (General)
II.	General Superintendence and Services on Railways	3.	A	General Superintendence and Services on Railways.
III.	Repairs and Maintenance	4.	B	Repairs and Maintenance of Permanent Way and Works.
		5.	C	Repairs and Maintenance of Motive Power.
		6	D	Repairs and Maintenance of Carriages and Wagons.
		7	E	Repairs and Maintenance of plant and Equipment
IV.	Operation	8.	F	Operating Expenses-Rolling Stock and Equipment.
		9.	G	Operating Expenses-Traffic.
		10.	H	Operating Expenses-Fuel.
V.	Staff Welfare, Retirement Benefits and Miscellaneous	11.	J	Staff Welfare and Amenities.
		12.	K & N	Miscellaneous Working Expenses and Suspense
		13.	L	Provident Fund, Pension and other Retirement Benefits.
VI.	Railway Funds and payment to General Revenues.	14.	M	Appropriation to Funds.
		15.		Dividend to General Revenues, Repayment of loans taken from General Revenues and Amortization of over Capitalisation.

Note: Abstracts A to L are arranged serially to Erstwhile Demands No. 03 to 13 ( Except Abstract I )

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Annexure J of Appropriation Accounts - A Power Point Presentation

Annexure j of Appropriation Accounts of Indian Railways from Nageswara Rao M

Difference between Vetting and Concurrence

Difference between Vetting and Concurrence

Vetting:   refers to conforming of a factual correctness of figure or statement of figures.

Examples: Vetting of Briefing Note, Estimates, Purchase Order etc.

Concurrence:  refers to agreeing a proposal in its entirety including the figures given under proposal.

Examples: Concurrence for construction of new bridges, replacement of machinery, etc.

Note: Extract from the comments given by F(X)/Dte in reply to information sought under RTI Act, 2005.

http://rti.railnet.gov.in/rtidata/Scanned/n4192.pdf

TWFA - Transfers Without Financial Adjustments

T W F A

1990,1995,1997 (with out Books) & 1994 (with Books)                                         5 Marks  - short notes question   

ü Expanded as “Transfers Without Financial Adjustments:”

ü Relates to Adjustment of transfer of Rolling Stock assets from One Railway or Unit to another Railway or Unit.

ü Journal Entry is not required.    Also raising Debits on another unit is Not required.

ü Done only through adjusting into the financial books of the Two Railways or Units by Transfer Entry.

ü The amounts simply added up in the Opening Balances for the year of Unit taking over the asset, and

ü Deducted from the Opening Balances for the year of the Unit surrendering the asset.

ü Purpose/ Advantage  of T W F A  :

1.      To avoid effect on financial accounts and budgeting.

2.     To rectify the progressive balances in respect of the accounts of the previous year already closed.

ü True examples of T W F A are:

A.    When the former State Rlys were integrated with the Indian Rlys during the year 1952, all assets belonging to the former were taken over by the respective zonal Rlys

B.     The existing balances in SRPF transferred to NCSRPF.
                                       
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CAPITAL FUND - An Important short notes/Essay type question

CAPITAL FUND

1995 (with Books)   1997 (without Books)                                          5 Marks  - short notes question   

        Ü  Created w.e.f 1992-93 in pursuance of the recommendation of RCC 1991.

        Ü  Operated as a Minor Head under Major Head 8118.

        Ü  Credits to the Fund are:

A)     Appropriation of the Revenue Surplus after meeting obligations of

§  Payment of Principal as well as Interest on Loan to  D.F.

§  Appropriation of current year D.F.

§  Payment of deferred dividend.

B)      Interest on Capital Fund ( at the rate decided by the RCC)

        Ü  Debits to the Fund are:

 A)     This Fund is utilized to finance expenditure until now charged to Loan Capital , to the extent of balance available under this Head

B)      No separate rules existing for utilizing this Fund usually charged to all Plan Heads (except Plan Heads 11 & 51).

 RATIONALE OF CREATING CAPITAL FUND:

        Ü  To reduce the borrowings from General Revenues (i.e., Loan Capital or Gross Budgetary Support (GBS) from Government).  Because the loan capital  is non -refundable and interest bearing loan.  The Interest is paid in the form of Dividend to General Revenues.  Since Loan Capital is non – refundable, the payment of dividend also perpetual. 

        Ü  Year by year, the GBS (Gross Budgetary Support to Railways is declining. During 1975-76, the GBS is around 75 %.  Now in the year 2011-12, it came down to 34%.

        Ü  Plan Size of the Railways cannot be reduced, since capacity restrictions would endanger the economic progress of the country.   The gap between the requirements and the availability is to be bridged.  The only way is to increase internal resources, that’s why the creation of Capital Fund.

        Ü  No dividend will be paid on the expenditure met from the Capital Fund, as the same is generated from internal resources ( not borrowing from General Revenues).  On the other hand, Interest is credited to the Capital Fund on the balance of the Fund at the end of financial year.  (Rate of interest is equal to the Dividend rate and recommended by RCC from time to time)

        Ü  Total Investments made from Capital Fund till 2010-11 were Rs.38676 crores. That means every year, actual saving of Rs.2320 crores by avoiding dividend payment, since these investments are met from Capital Fund, not Capital. (if assumes dividend rate is 6%).

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