New initiatives in IR
Budgeting
22.12.2015
OUTLINE OF THE
PRESENTATION
• Financial Scenario
• New Initiatives
Components of O.R.
Operating Ratio = {(OWE excl. suspense) +Approp.to (DRF+Pension Fund)}
Total Earnings from (Pass.+Other Coach.+Goods+Sundry)
ITEM
Share in Pie
% growth over COPPY
Staff costs
49% of OWE
13%
Fuel
25% of OWE
4%
Stores
5% of OWE
4%
Lease
7% of OWE
24%
Others
14 % of OWE
28%
Other components for calculation of OR: Pension ( 17.5% growth
over previous year) and DRF (6.7% growth over previous year)
3
IR : Performance to end of Nov’15(Rs. in crore)
Nov'15
BP
Target
2015-16
Passenger
50175 33267
Other Chg
4612
3088
Goods
121423 77758
Sundry
7318
3278
Total
183528 117391
To end of Nov'15
Nov'15 % Var.
%
%
over Growth Required
BP
over
growth
COPPY
29412 -12%
5%
19%
2788 -10%
6%
15%
71207
-8%
8%
15%
2707 -17%
2%
47%
106115 -10%
7%
17%
1. Earnings are higher over COPPY but lower than the target
2. Partly, they are higher over COPPY due to the impact of the fare & freight
revision implemented in June ’14 & April’15.
4
Trends in Expenditure upto Nov 2015
Zone
CR
ER
ECR
ECoR
NR
NCR
NER
NFR
NWR
SR
SCR
SER
SECR
SWR
WR
WCR
Me tro
Total
Nov' 14
6888.15
5222.51
4901.60
3702.95
9013.59
4457.76
2729.64
3422.80
3425.35
5162.82
6680.42
4423.59
3073.18
2649.68
6127.21
3693.06
205.97
75780.28
Expenditure
6917.95
5359.19
5102.18
3865.91
9134.09
4640.12
2990.12
3311.80
3340.57
5218.19
6496.77
4674.84
3368.45
2651.92
5975.67
3852.23
213.35
77113.35
%
Growth
variation
over
with B.P. COPPY
-5%
0%
-3%
3%
-3%
4%
-10%
4%
-4%
1%
0%
4%
6%
10%
-8%
-3%
-9%
-2%
-7%
1%
-10%
-3%
-3%
6%
0%
10%
-7%
0%
-1%
-2%
1%
4%
-5%
4%
-4.2%
2%
*Higher trend (>=10%) in NER (D08, D10 & D12)
and SECR (D06 & D12)
5
Commodity-wise Freight loading 2015-16
Commodity
(In MT)
15-16
target
Nov 15
Nov 14
Var.
over BP
Var.
over
COPPY
COAL
585
360.46
351.43
-22.11
9.03
Raw material for
steel plants
21
13.66
12.36
-0.07
1.30
43.50
27.29
26.18
-1.15
1.11
Iron ore
125
76.2
74.38
-5.52
1.82
Cement
120.50
69.42
72.95
-9.45
-3.53
62
28.72
36.15
-11.79
-7.43
Fertilizers
49.50
36.36
30.63
4.01
5.73
Mineral Oil (POL)
43.25
28.55
28.21
0.25
0.34
Container Service
54.50
30.57
32.71
-5
-2.14
82
48.94
46.19
-4.77
2.75
Pig Iron & finished
Steel
Food grains
Balance other goods
6
Trends in Originating Passenger & Earnings
Earnings from Passenger Operations (April to
November)
29411.79
27990.88
5662.54
5578.07
5454.31
23810.96
2013-14
Rs in crore
2014-15
2015-16
Rs in croreIn million
Passengers Originating trend up
to Nov’15
Item
Growth up to
Nov’14
Overall passengers
-1.4%
-2.2%
Sub-urban passengers
-0.2%
-2.5%
Non- Suburban
inclusive of
-2.9%
-1.9%
Growth up to
Nov15
a
PRS
9.4%
2%
b
Non-Sub NonPRS
-4.4%
-2.4%
8
80
Incremental Freight Traffic since 6th PC
70
incremental tonnage in MT
60
50
40
Full Year
Till Oct.
30
20
10
0
2007-08
2008-09
2009-10
2010-11
2011-12
year
2012-13
2013-14
2014-15
2015-16
Focus areas in Other Coaching Earnings
Item
B.E. 2015-16
Growth Target over
2015-16
Rs 4,612 cr
15.4%
Other Coaching
Item
B.P. Nov’15
Actual
Nov’15
Shortfall
over B.P.
Growth over
COPPY
Other Coaching
Rs 3088 cr
Rs 2788 cr
(-) Rs 300 cr
5.8%
Major Items
2012-13
2013-14
2014-15
RE
2015-16 BE
Parcel
Rs 1,594 cr
Rs 1,780 cr
Rs 1926 cr
Rs 2101 cr
Luggage
Rs 94 cr
Rs 95 cr
Rs 103 cr
Rs 107 cr
Post Office Mails
Rs 140 cr
Rs 180 cr
Rs 196 cr
Rs 198 cr
Penalties, fines,
parcel demurrage,
platform-tickets etc.
Rs 1,012 cr
Rs 1,353 cr
Rs 1493 cr
Rs 1791 cr
10
Financial Impact
BE 15-16
Growth over
COPPY
Annualized
growth (since
2007-08)
Likely Post-7th
PC growth
Staff Cost
58,333
10%
15.7%
38%
Pension
Outgo
33,220
15%
19.6%
56%
-The 7th PC will put stress on revenue generation which has not been encouraging so far.
-Traffic Earnings required to grow at 27% to 30% to meet the impact .
-Hence ,close monitoring of expenditure along with cost cutting measures and
initiatives.
New Initiatives in
Budgeting on IR
Point of concern 1: Excess Expenditure
-Working towards ‘Nil” excess: 2014-15 fewer zones
reported excess under certain grants.
-Constitutional position mandates no spending more than
what has been granted under the Appropriation Act.
-P.A.C. takes harsh view of the excess especially when
Supplementary Grant is obtained
-Remarks of the P.A.C. scathing including fixing of
responsibility. : fix responsibility through APAR & refer to
DoPT.
-Therefore instructions to all zones on control over
13
expenditure within Grants/SL
Point of Concern 2
• Incidences of Items under Objection
increasing
• Course correction in 2015-16 i.e: Delegation of
powers for sanctioning the revised cost of
work
• Appropriate budgeting
• Pink Book now reflects Sanctioned Cost. Rlys
required to revise prior to sending for reappropriation.
Point of Concern 3: Availing of
Supplementary
• SDG taken and amounts not spent
• Out of turn work moved through SDG and not
executed immediately or later dropped from
Pink Book
• Estimation of Charged Appropriation in
correctly estimated leading to insufficient SDG
being obtained.
Point of Concern 4: blocking of Capital
• Only around 40% of rail supplies are utilised in
track renewals
• Impacts inventory levels and avoidable
blocking of funds
• Therefore Rails procured be linked to Track
Renewal done in km
Linking Inventory to the Final Head
outlays
• Since 2014-15, this has been effected.
• Production Units outturn of Rolling Stock &
budget requirements are now inter-related.
• ZR’s workshop & fuel budgeting is linked to
their final head outlays (PU 27,34, 35,63,
64,60)
• Entire Rolling Stock Budget is linked now to
transfer price & quantity; PU’s to freeze
Transfer Price for the entire f.y
Budget VPN
• Assists in accurate forecasting: linking of all units to a
central server through VPN courtesy Railtel & their
regional Centres.
• Secured through password/permissions granted by
Board. Open round-the-clock.
• Inputs solicited post submission of Accounts and
various fields frozen: reduces year-end data collection.
• Extensive training & workshops held with all .
• RE inputs sought early for distribution by December.
• RE Pink Book introduced with work-wise allotments.
• Inputs from ZR’s used for framing the estimates at RE &
FM stage
Budget VPN
• Final supplementary obtained from Parliament on
these inputs ( when Supplementary can be taken)
• Initially only RE solicited which will form base for
BE.
• Pension data to be carefully reviewed & trend
analysis done.
• All the cleanliness activities are to be booked
under Demand No.8 Sub-head 590, except station
sanitation which would continue to be shown
under Demand No.9, Sub-head 290.
New Modules on the VPN
• Re-appropriation: modified outlays now
immediately visible with correction in the
database
• ALL reappropriations to be effected only
through this module.
• Exchequer : Receipt of request & dispatch of
orders speedened.
Facilitating processes
• Reappropriation orders clubbed and powers delegated
to Rs. 2.5 crore; full powers for LAW Book items ; ZR’s
powers upto Rs.2.5 crore for Reappropriation between
itemized Pink Book items & Lumpsum provisions;
• Request that the proforma appended to Board’s letter
number 2011-B-174 dated 3.7.2015 be strictly adhered
to.
• Reverse Reappropriation
• Post-facto approval sought for higher expenditure
already incurred through Reappropriations
Facilitating processes
• Re-vamping of Budget Call letter
• Shared Budget folder for dissemination of
issues, policy, instructions etc.
• Comprehensive Economy Instructions
Recurring savings of paper
• Previously, Pink Book was one consolidated
document for all zones.
• Consumed more than 12 lakh sheets of paper
approximately
• In Budget 2015-16, Zone-wise Pink Book
introduced.
• Recurring savings of more than 1.4 million
pages
Redefining relationship with MoF
• Intention to redefine methodology of dividend computation and
bring in more reliefs
CURRENT LIABILITIES ABOSRBED BY IR AND LIKELY CONCERNS
• Konkan Rail Corporation Ltd
• KMRCL
• IRFC debt; incremental debt on account of augmented borrowing in
the fututre
• Impact of 7th Pay Commission
• Requirement for DRF, DF; Operating Losses on Uneconomic Branch
Lines.
ISSUES
• Ring Fencing of GBS by MoF
• Higher GBS translates into higher Dividend, paid in perpetuity
• Debt Servicing of EBR(IF)
• No scope of squeezing costs; subsidies a living reality
Contd…
• Rate of dividend for 2014-15 and 2015-16
• All National Projects and Projects of National
Importance including identified strategic and
border area projects be declared dividend free
or eligible for subsidy relief on dividend
liability and further that Dedicated Freight
Corridors to be considered at par with new
lines for relief in dividend payment.