Railway Budget 2021-22 - Revenue

 

2021-22 Railway Revenue Budget - Financials

SN	Receipts	Amount (Rs. in Crores)	Percentage		SN	Expenditure	Amount (Rs. in Crores)	Percentage
1	Coaching Earnings	67200	31 %		1	Ordinary Working Expenses	154399	74 %
2	Goods Earnings	137810	63 %		2	Appropriation to DRF	800	-
3	Sundry Earnings	12000	6 %		3	Appropriation to Pension Fund	53300	26 %
4	Gross Earnings (1+2+3)	217010	100 %		4	Gross Working Expenses (1+2+3)	208499	100 %
5	Suspense	100			5	Suspense	(-)  149
6	Gross Receipts (4+5)	217110			6	Gross Expenditure (4+5)	208300
7	Misc Receipts	350			7	Misc. Expenditure	2400
8	Total Receipts (6+7)	217460			8	Total Expenditure	210700

 

Net Revenue = Total Receipts - Total Expenditure

Net Revenue = 217460-210899

Net Revenue = 6561

Rs. 6561 Crores Net Revenue is appropriated to

1.       Development Fund - Rs. 1561 Crores

2.       RRSK - Rashtriya Rail Sanraksha Kosh - Rs. 5000 Crores

Nil appropriations to All other Funds like Capital Fund , RSF - Railway Safety Fund, Debt Service Fund.  

 

 

 

 

 

Railway Budget 2021-22 - Highlights

 Highlights of Railways Budget 2021-22

 

• Single Demand Number - 84 ( 83 for 2020-21)

 

• Capex - 2,15,058 Crores

 

• Budgetary Support from Ministry of Finance -110055 Crores

 

• 100 % Electrification  - by December, 2023

 

• BG Route KMs - 72 % Electrification by December, 2021

 

• DFC - Dedicated Freight Corridors - Commissioned by June, 2022

 

• The Sonnagar-Gomoh Section (263.7 km) of Eastern DFC  -taken up in PPP mode in 2021-22

 

• Proposed DFCs

 

1. East Coast corridor from Kharagpur to Vijayawada

2. East-West Corridor from Bhusaval to Kharagpur to Dankuni

3. North-South corridor from Itarsi to Vijayawada

 

• Vista Dome LHB coaches on Tourist routes

 

•  ATPS - Automatic Train Protection System (indigenously developed one) - introduced  in Important routes to eliminate Train Collision. 

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MIS CLASSIFICATION OR ANNEXURE "J"

MIS CLASSIFICATION  OR ANNEXURE  “J”

1990,1993,1994 (with Books)                                                          5 Marks  - short notes question    

       Ü  During the course of accountal in books, an expenditure or income wrongly appeared in any other Head of Account instead of Proper Head of account, the mistake is known as MIS CLASSIFICATION.

       Ü  During the course of financial and other reviews, it is checked that whether there is any booking misclassified and if found the same is regulated in the same year through Journal entry.

       Ü  Examples are:

§  Booking in HBA instead of Motor Car advance.

§  Booking in Coaching Earnings instead of Goods Earnings.

§  Booking in One Demand instead of another Demand.

§  Booking in Revenue Demand instead of Plan heads or vice –versa.

        Ü  A statement showing items of misclassification and other important mistakes either detected by Statutory Audit or by Accounts should be prepared in ANNEXURE – J (Statement of important misclassifications and Other important mistakes detected)

        Ü  Pro forma of Annexure J is as follows.

Name of Railway               Grant affected   Brief description of Mistake   Amt.(Rs.)             

1.

2.

3.

Important change in Annexure J

(after merger of Railway Budget with General Budget from 2017-18 onwards)

1. Annexure J  - Big Relief to Indian Railways - Statement of Misclassification is now limited to Misclassification from Revenue to Capital or vice versa and Voted to charged or vice versa)  - Included in Appropriation Accounts and goes to Parliament through PAC

2. Misclassification from One SMH to another SMH on Revenue segment only figured under Statement of Other Mistakes (Not Statement of Misclassification)  - Not appeared in Appropriation Accounts.  To be settled at Zonal Railway level only.

Type	Examples	Dealt at
Misclassifications	Voted to Charged or vice versa Capital to Revenue or vice versa	Railway Board.  Unresolved will become part of Audit Report
Other Mistakes	One SMH to another SMH	Zonal Railway only (Need not send to Railway Board)

 

UN ECONOMIC BRANCH LINES - An important question for IIIA examination - repeatedly asked

UNECONOMIC BRANCH LINES

1987,1988,1991 (with Books) & 1990,1992 (without Books)                       5 Marks  - short notes question

                  

• Definition: All Narrow gauge lines and such lines that join the Main line net work at one end only are termed as branch lines ( based on the recommendation of Uneconomic branch lines committee, 1969)

•  The Branch lines which do not earn profits are termed as Uneconomic Branch Lines  or un remunerative Branch Lines  .

• Assessment on territorial basis of the financial results of the branch lines indicates that some of them suffered a loss. 

• Several high-level committees have unanimously recommended that all such uneconomic branch lines, where alternative modes of transport exist or can be developed, should be closed down so as to reduce, to the extent possible, the losses which accrue to the Railways, year after year. There is, however, reluctance on the part of state governments to close down such lines. 

• The Railway Reforms Committee in Part XI of their report on ‘Economies’ (October 1983) had recommended that (i) 40 such lines where adequate alternative road infrastructure are available & (ii) 17 such lines in Gujarat where alternative road infrastructure could be developed, should be closed down and in cases where the state governments do not agree for closure for their own reasons they should share the losses with the Railways on 50:50basis. Instructions have been issued for closure/dismantling of 21 uneconomic branch lines (15 out of 40 & 4 out of 17 referred to above and 2 other uneconomic branch lines). 

• only 15 lines have been closed permanently by the Railways.

•  In order to enable the state governments for closure of the remaining 36 lines, the Railways are ready to offer financial assistance as under:

1. On one time basis, the Railways may subsidize the procurement of additional buses required due to

closure of rail sections subject to the State Government agreeing for their permanent closure. 

2. Again, on one time basis, Railways may offer financial assistance for

development/improvement of road infrastructure which will be a prerequisite for withdrawal of train services.

3. Offer of Railway embankments in respect of 13 lines in Gujarat for conversion into all weather metalled roads.

2018-19 year data on uneconomic branch lines  

• Total lines – 99 (BG -51, MG -19 and NG-18)

• Total Investment on these lines-4000 Crores

• Total loss during that year – 2342 Crores. (excluding dividend on their account)

• In spite of showing losses, these branch lines worked due to public pressure and opposition of the State Government to close such lines.

• The running of above lines as part of social service obligation on Indian Government Railways

• Financial results of these lines will be worked out on marginal cost principle.

• The Annual Statement  regarding the financial results of the “uneconomic branch lines  is submitted to the Railway Board in prescribed form.

• This statement should also indicate the steps taken to improve the performances and reduce the working expenses.

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Cheques & Bills Suspense head and its reconciliation

Cheques and Bills

·         It is a suspense head under the Major Head "L-Suspense and Miscellaneous" suspense accounts

·         Object: To keep a watch over the Cheques issued by a Railway.

·         What is Cheques & Bills ?   It is nothing, but similar to Bank A/c Operated in Commercial Accounts.

Example:  Salaries Rs. 20,000 /-paid by the firm through cheque.  Journal entry is as follows.

Date	Particulars	Debit	Credit
--	Salaries A/c	Rs.20,000
----	To Bank		Rs. 20,000

 In Railways, Salary of SSO/A Rs.20,000 paid by the Railways.

Date	Particulars	Debit	Credit
--	Erstwhile Demand No.03	Rs.20,000
----	To Cheques & Bills A/c		Rs. 20,000

·         The only difference between Commercial firms and Indian Railways is, that we operate Cheques and Bills A/c instead of Bank A/c.( Deposit with RBI A/c in case of Indian Railways)

·         Deposit with RBI A/c of Indian Railways is similar to Bank A/c of commercial firms

·         The reason is why Deposit with RBI A/c is not operated is that the cheques issued are not encashed immediately at the Bank and thereby affecting the Railway Account in RBI i.e., Deposit with RBI.

·         To keep a watch over the cheques and avoid excess payment, Cheques and Bills suspense A/c is operated.

Journal entries – Flow of Cheques and Bills Account

1.      When payments are made by Railways

Date	Particulars	Debit	Credit
--	Respective Demand No.__ Dr	Rs.20,000
----	To Cheques & Bills A/c		Rs. 20,000

2.      When individual Cheques are encashed by the parties at PSBs (Public Sector Banks)

Date	Particulars	Debit	Credit
--	Cheques & Bills A/c Dr	Rs.20,000
----	To PSB Suspense A/c		Rs. 20,000

Or Cheques & Bills A/c is Minus Credit

3.      When the PSBs (Public Sector Banks) adjust the amount of payment of encashed cheque against RBI (Reserve Bank of India)

Date	Particulars	Debit	Credit
--	PSB Suspense A/c Dr	Rs.20,000
----	To Deposit with RBI A/c		Rs. 20,000

Or PSB Suspense A/c is Minus Credit

·         Net of the above 3 journal entries is

Date	Particulars	Debit	Credit
--	Respective Demand No.__ Dr	Rs.20,000
----	To Deposit with RBI A/c		Rs. 20,000

Cheques and Bills Reconciliation :

Proforma

		January, 2018			February, 2018
Cheque No.	Date	Credit	Minus Credit	Credit Balance	Credit	Minus Credit	Credit Balance
001	01.01.2018	Rs.20000	-	Rs.20,000	-	Rs.20,000	Nil
002	02.01.2018	Rs. 1000	Rs.10000	Nil	-	-	-
003	03.01.2018	Rs.1000	Rs.10,000	(-) Rs.9,000	-	-	(-) Rs.9,000

·         The issued cheques are entered as Credit in the month of issue.  Whenever the cheque is encashed at the concerned bank, the same is entered as Minus credit in the month, it  encashed.

·         It always show Credit Balance and will represent the amount of unencashed cheques.   Suppose, in any case the balance against any cheque show Debit balance or Minus Credit balance, it is either fraud /excess of cash paid by the bank against the cheque. Example is Cheque No. 003 of the above table. This fraud or excess payment by the Banks is found only by reconciliation of Cheques & Bills.

·         The cheques drawn statement is prepared by the Accounts officer indicating the cheque number, the bank and the amount of cheques. The total amount of the cheque drawn is reconciled with the amount shown in the General Cash book under cheques & bills.

·         When Individual cheques are encashed: Public Sector Bank branches forward (through their Focal Point branch) Daily Main Scrolls accounting for individual cheques encashed.  After verification of the statement (either manually or through IPAS) received from focal point branch, the DMS-Date wise Monthly Statement, the amount there of will be adjusted.

·         Uncashed cheques for more than 6 months old, the amount cheques is written back from the Cheques and Bills Head duly transferring the same to Sundry earnings.

Date	Particulars	Debit	Credit
--	Cheques & Bills A/c Dr	------
----	To Sundry Earnings A/c		------

Or Cheques and Bills A/c is Minus Credited.

·         The monthly reconciliation  of cheques and bills is made and balance under the head "cheques and bills" at the end of every month is reconciled with the General books and a certificate of reconciliation is recorded on the final reconciliation register of cheques and bills under the signature of Gazetted officer.

• Para 444 of Accounts Code: 

1. Reviewed Cheques & Bills Suspense A/c Balance reviewed - every six months.

2. The amount of cheques, remaining uncashed for more than six months after the date of issue should be credited to 'Abstract Z 650 other unclassified or to the work concerned according as the transaction relates to working expenses or works respectively.

3. The particulars of all uncashed cheques so adjusted in accounts should be kept in a special register to be maintained for the purpose to facilitate disposal of requests for fresh cheques that may be received subsequently. 

 

·         Now, due to IPAS, the entire mechanism of Cheques and Bills Suspense Account is done through Programme.

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