CAG exposes alleged irregularities that cost Railways Rs 2,486 crore

NEW DELHI: The comptroller and auditor general has indicted the railways for deficiencies in administration of dual-pricing of iron ore, saying the "serious lapse" cost the nation about Rs 2,480 crore. In a report tabled in parliament on Tuesday, a day before the government presents the interim railway budget, the CAG said the railways lost significant revenue between May 2008 and March 2012 because it booked iron ore at domestic rates without essential documentation. This indicates “a serious lapse on the part of the railways administration”, said the report, which is for the year to March 2012. In addition, a penalty of Rs 13,851.77 crore was due for recovery from the consignors, who by availing the domestic rate would get the benefit of the lower rate, the report said.

According to the report, the railways allowed 358 parties to avail domestic rate for transportation of iron ore despite non-submission/ partial submission of the prescribed documents. Due to a dual-pricing policy introduced from May 2008, the cost of transporting iron ore for export was on an average higher than three times the cost of transporting iron ore for domestic use.

"As such the risk factor in transportation of iron ore for domestic use was high. Thus, prudency demanded that adequate safeguards in the form of procedures and checks were put in place against misuse of the dual pricing of iron ore traffic,” the CAG said, adding that a number of "deficiencies".