FINANCIAL JUSTIFICATION
FOR RAILWAY PROJECTS
All expenditure incurred on the
new assets or on improvement of exiting assets should be financially justified
before it is actually incurred except when it is chargeable to ordinary revenue
or when it is incurred on a statutory obligation in consideration of safety or
to provide amenities to the staff or railway users.
Further, that except in the case
of residential buildings, and rolling stock to which special rules are
applicable , no proposal for expenditure should ordinarily be considered as
having been financially justified unless it can be shown that the earnings or
the savings in working expenses expected to be realized as a result of the
proposed outlay are such that after meeting the average annual cost of service
of the assets, they yield a return at not less than the rate at which dividend
is payable to the general revenues.
It would thus appear that
generally all expenditure on new assets or on improvement of existing assets
must be financially justified. There may be schemes of expenditure falling
within the categories of “un-remunerative projects for improvement of
operational efficiency” which are under the existing rules of allocation
chargeable to DF or OLWR according to the amount involved. Even in such cases however, full financial
implications are required to be worked out to see whether the scheme is likely
to be remunerative or otherwise. If it is expected to be remunerative the
expenditure is charged to capital otherwise to DF or OLWR.
No Leader Yet I
Must Work
No = New Lines
Leader= Line
capacity works
Yet = yard
remodeling
I
= Iintroduction
of new services
Must = micro wave
works & signaling
Work=workshops
Preparation of the project
estimate:
In view of the precarious
financial situation, the present system of making budget proposals in a hurried
way without much consideration must be stopped forth with. To achieve this
dedicated and concerted effort on the part of the executives and finance personnel
is required.
Earnings estimate:
Assessment of working expenses:
Provision of depreciation:
Provision for rolling stock
Schemes for change of traction:
very interesting way of presentation .....thanks.
ReplyDeleteVery nice article sir...
ReplyDeleteExcellent article
ReplyDelete