The railway accounting has often been criticized and a need for shifting it to company accounting and double entry accounting has been debated upon. However, I feel that nothing has been done so far as no business case has been built for it… So here is a business case….

We need some kind of a profit center accounting… everyone should be aware of what things cost and it need be ensured that there are no hidden costs of any kind (other then legacy costs like costs of passes, pensions… which also be need to be converted to current contributions for future liabilities and charged to units)

It is proposed that we introduce a new layer over and above the current system.. the current system is only a classification of expenditure, and somehow overtime the different abstracts have got allocated to different branches, and each of them lost connection with their deliverable….

The current classification system is summarized in the table below:

CLASSIFICATION OF REVENUE EXPENDITURE APP. I

Sr.No.	Group	No	Demand   Name of demand
I.	Policy Formulation and Services Common to all Railways	1. (A)	Railway Board
		2.	Miscellaneous Expenditure (General)
II.	General Superintendence and Services on Railways	3.	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)	Miscellaneous Working Expenses.
		13.  (L)	Provident Fund, Pension and other Retirement Benefits.
VI.	Railway Funds and payment to General Revenues.	14. (M)	Appropriation to Funds.
		15. (O)	Dividend to General Revenues, Repayment of lones taken from General Revenues and Amortization of over Capitalisation.

And of course demand 16 — which is for new asset acquisition and for new works.

The problem with this system being sacrosanct is

a) It breeds departmental-ism as each grant gets managed by one department

b) With time a total disconnect with the real world happens, as the linkage between deliverable and their costs gets lost.

c) With no changes being possible at working level, their are large pockets of inefficiency as budget allotments get politically motivated rather than being driven by deliverable.

What steps need to be taken……

i) Computerization of this base level, much exists that on the fly statements are required.,

ii) Recasting over and above this layer of the different units

iii) Designate profit centers and make profit center incharges

iv) Remove all limitations on individual profit center incharges in re-allocation of funds within their own profit center head.

v) Parliament should only make two approvals — new assets and total of expenses…. with railway administration being given a 5 year complete leway to move funds around as and where felt, till some order is obtained in the railway working.

What could be these profit centers be? Some examples could lie in……

a) All “A” and “B” class stations

b) All workshops and production units

c) Track stretched between junctions – (Pway, S&T, Electrical in one combined form)

d) Profit centers for operating and commercial to be at railway level only.. measurement only in terms of throughput and loading for the two departments individually.

e) A system of transfer pricing of assets maintenance schedules

Any such rework of the system is going to add managerial information costs(it has to be acceptable and can give much larger returns) over those above incurred, but the IT technology can help us in ensuring that

a) These additional costs are minimal

b) Need to be fine tuned over time and also changed and continuously adapted over time to address issues raised and the addressed as gaps emerge.