Railway Minister Suresh Prabhu is in favour of comprehensive accounting reforms in the Railways. The reforms should be such that there is a revamp of the entire culture where government thinks that incurring expenditure in itself is a success, without bothering to find out the outcome, he says. Accounting reforms are a prerequisite for a rail regulator, Prabhu told BusinessLine . Edited excerpts from an interview:

Being a chartered accountant, what are your views on Railway accounting reforms?

Accounting reforms should not be confined to moving from a single entry to double entry system, which will not encompass issues such as cash-to-accrual accounting that are absolutely necessary. I feel, in addition to these two issues, expenditure should also be tracked — when it is budgeted, incurred, output, as well as the outcome. Accounting should also have management information, so that if you want, you should also be able to get Right to Information from the system.

By including this in the accounting reforms, we can revamp the entire culture where the government thinks that incurring expenditure in itself is a success and does not bother to find out the outcome.

Then, there is also the issue of costing. There are fixed, variable costs, so apportioning is important. Pricing of a service pre-supposes all this information. You cannot have a rail regulator till you have all this.

Will this be done within a year?

I cannot tell at this point. This is a process that we have already started.

How will you rationalise fuel costs?

We are trying to reduce the cost of power. We are the single largest buyer of power and, unfortunately, pay the highest charges. The Bureau of Energy Efficiency is already doing an energy audit, the Power Ministry is involved, the Central Electricity Authority is also giving inputs, and the Member (Electrical) is trying to operationalise it. We have signed two power purchase agreements.

With maintenance works suffering, the Railways had sought phase-2 of special railway safety fund from the Finance Ministry. Any update?

That is under process in the Finance Ministry.

Do you think there is need to rationalise Railways’ dividend policy given that it pays dividend on capital-at-charge (cumulative gross budgetary support), which is like a loan in perpetuity?

That is the prerogative of the Parliamentary Committee. We have already written to them.

You have talked about raising funds through extra budgetary resources. Will IRFC be getting into infrastructure finance?

Those details we will work out. We are in talks with LIC, World Bank and IFC on various funds. On LIC loan, we have signed a MoU. We have to work out the exact structure.

Are you also talking about adding to the debt of the Railways…

How can infrastructure be created without debt? Across the world, countries have revenue deficit, States have revenue deficit. The Railways virtually has no debt at all on the balance sheet!

Where will funds come for Indian Railways connecting to the North East, especially as China is planning a rail link to the Nepal border?

We are already working on it with the Defence Ministry and will take care of it jointly.

Are there any plans to have a registration system for catering so that those delivering online food share some of the revenue with Railways?

E-catering is on in many trains. That happens through a proper process. People book their meals online. IRCTC has tied up with many private vendors who deliver the food. The revenues are booked.

But there are private players outside of IRCTC who book food online and deliver in trains.

How can they do it? Can any private player deliver foods in trains without Railways’ consent?

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