FC(Railways)’ Address at the Inaugural Function of the Platinum Jubilee Celebrations of IRAS at Vigyan Bhavan, New Delhi on 16^th December 2004

 

          Hon’ble Finance Minister Shri P.Chidambaramji, Hon’ble Ministers of State Shri R.Veluji and Shri Naranbhai J. Rathwaji, Dr. D.M. Nanjundappa, Shri R.K.Singh, Chairman, Railway Board, my colleague Members from Railway Board, esteemed former Financial Commissioners and other senior retired officers, distinguished invitees from sister civil services, members of IRAS fraternity and representatives of the print and electronic media.

 

          Hon’ble Minister for Railways Shri Lalu Prasadji, who could not attend the function owing to pressing engagements in Parliament, has been giving thrust to revenue generation through sustained drives to arrest leakage and evasion. Emphasis is also being placed on expenditure control measures, enhancement of efficiency and productivity so as to improve the financial health of the system. All these measures have been sending right signals down the line.

 

          I extend a hearty welcome to Shri P.Chidambaram, Hon’ble Finance Minister, whose spontaneous acceptance of our invitation to be the Chief Guest on this memorable occasion, has been a big morale booster to the cadre. Sir, the officers are fully alive to your expectations on the fiscal discipline front and are aware of their responsibilities in discharging this important task. I welcome you Sir, on behalf of all those present here.

 

          Hon’ble Minister of State Shri R.Veluji, has been taking keen interest in the improvement of Railway finances and it is indeed a fine gesture on his part to participate in this memorable event! On behalf of IRAS, I welcome you Sir. Shri Naranbhai J Rathwaji, our Hon’ble Minister of State has shown his concern for the growth of Indian Railways and his presence here is a source of encouragement. I extend a warm welcome to your Sir! I am indeed grateful that Dr. D.M.Nanjundappa, who was the Chairman of Railway Fare and Freight Committee is present here to deliver the C.T. Venugopal memorial lecture on the topic “Economic Reforms and Resource Allocation – Infrastructure sector”. With so much attention on the Railways’ fare and freight structure to retain its competitive edge, it is only apt that Dr. Nanjundappa  shares his views and insights.

 

          Anniversaries are occasions when we pause to look back, ponder over our achievements and shortfalls, prepare for the challenges of the future and proceed with commitment. Railway Accounts Service with its rich tradition and proud legacy, came into existence when the responsibility for the compilation of accounts of Indian Railways was taken over by Financial Commissioner in April 1929, from the Auditor General. IRAS was constituted as a superior service (now known as Group A) on State-managed Railways. The first direct UPSC recruit to the IRAS late C.T. Venugopal joined the service on 15^th April, 1930. A distinguished luminary of IRAS, he left an indelible imprint on the organisation.

 

          The Service has contributed substantially to the Financial Management of the Indian Railways. I would like to use this opportunity to highlight a few of the notable contributions which have changed the face of the organization.

 

·        Computerisation was introduced primarily in accounting areas and the EDP centers started functioning under FA&CAOs, with immense benefits to the system in the year 1965.

 

·        In the area of Capital budgeting, discounted cash flow technique as an evaluation tool came to be accepted way back in 70s.

 

·        Recasting of accounting heads to align with the demands for grants and plan heads to achieve effective budgetary control was attempted with success in 1979.

 

·        Traffic costing Cell as a unit started functioning under FA&CAO during late 70s and provided the much needed costing data, through an elaborate system of bifurcation of joint costs based on US Rail road and Canadian models and came to be known as Green Book. The Institute of Cost and Works Accountants of India, which went into the system at the instance of RFFC, was by and large satisfied with the  methodology.

 

·        Exchequer control as a fiscal responsibility measure was introduced as early as in 1971, which made each and every functionary of the Accounts department adhere to the cash limits imposed on a monthly basis. Over the years, the system has proved highly useful in enforcing budgetary control.

 

·        A rigorous scrutiny of the investment proposals, called works programme in Railway parlance, carried out by the department enables judicious use of the scarce resources.

 

          IRAS as a service has a special advantage in that its members are fully integrated into the fabric of Railway management. A fair and objective approach to the issues and problems which is inherent in the way the department functions, gets refined and enhanced, by an exposure to the operational posts in the field such as Divisional Railway Managers and General Managers.

 

Over the years, the service has been able to project an image of a friendly critic, a desirable and valuable ally interested in the long term viability of the system and a necessary adjunct for the betterment of the organization. This is no mean achievement, in an operational Ministry like Railways where decisions have to be taken with promptitude and implemented with expedition! It is to the credit of the officers that they display objectivity, fairness and financial wisdom in requisite measure to meet the challenges!

 

Another feather in the cap of the Service is incorporation and growth of the Indian Railway Finance Corporation. Railways were the first organization to successfully employ lease financing as a means to expand network capacity. IRFC, which is managed by a small team of IRAS officers has emerged as a premier agency for raising funds for Railways from domestic and International markets in a most cost effective manner and at very competitive rates.  The US $100 million syndicated loan negotiated at an all inclusive rate of 92 basis points over LIBOR in which 27 banks from Europe, Asia and Middle East participated and the US $25 million equivalent fixed rate yen bond at the interest rate of 1.85% have been acknowledged  in financial circles as some of the best deals. The faith that the lending agencies and the public repose in this institution can be gauged from the fact that Moody’s has assigned a Baa3 foreign currency issue rating to Indian Railway Finance Corporation Ltd. (IRFC) and has noted that the rating reflects IRFC’s successful niche franchise established through its role of arranging lease finances for the Ministry of Railways.

 

          But IRAS does not want to rest on its laurels!

 

          I would like to share, for the benefit of distinguished dignitaries present on the dais, two important areas embarked recently to be in alignment with the expectations of the stake holders viz. Accounting Reforms and Electronic Payment Gateway.

 

          Accounting Reforms which we have initiated contemplate setting up a fully computerized, integrated accounting system to ensure conformity with the internationally accepted accounting practices. It also envisages introduction of profit center concept based accounting separation of main lines of business which will facilitate profit measurements upto trains or sets of trains. It is also our endeavour to put in position an improved costing system to argue from a position of strength for suitable compensation for cross-subsidies as also to provide decision-support systems for flexi-pricing, within the delegated powers, to General Managers.

 

          The advent of plastic money and the tremendous advancement of the communication network have led to a situation where hard currency transactions are dwindling. With a view to reduce the cash as well as instrument handling as also to eliminate the delays and multiple dealings, Railways propose to introduce an electronic payment gateway system to one of the bulk-users of the Railways i.e. Electricity Boards and Power Houses by harnessing the IT development in the field. Initially the pilot project will be implemented on Badarpur Thermal Power Station for collection of coal freight from loading points and extended to other units later on. I am happy to inform that this initiative has the fullest support of Ministry of Power and will be a major break through in liquidating the outstanding dues. Software has been developed through CRIS which integrates an on-line payment mechanism through a nominated bank using the internet facility connecting with the process of issue of RR. This system will ensure expeditious realization of dues from Power Houses in a pre-payment mode thereby significantly bringing down the current outstanding. This pilot project is proposed to be operationalized very shortly and will be extended to other Power Houses as well.

 

The quality of service that a cadre provides depends solely on the quality of Human Resources and the diversity of skill-sets that its members possess. To keep a cadre in good shape not only physically but also intellectually requires continuous inputs for upgrading knowledge and skills. The advent of Internet has provided an excellent means for building a cohesive community built upon knowledge sharing. IRAS is proud to have an active web site, ably managed in-house at a senior level, which provides an open forum for all officers cutting across the hierarchy to voice their ideas and concerns. The training needs at the time of induction have been addressed to some extent by setting up of National Institute of Financial Management in Faridabad to provide professional inputs to IRAS probationers. A stint at NIFM also provides young officers an opportunity to interact with the offices of other Accounts and Finance services of GOI. However, at the middle and senior levels there is significant gap between training requirements and availability of programmes and resources. The changing nature of the service requires a good grounding in almost all areas of financial management including International Finance. This requires more specialized programs to be organized in collaboration with premier institutions in India and abroad. There is an urgent need to provide additional resources for this purpose. I am glad to announce that Centralized Training Academy for Railway Accounts (C-TARA) is being set up at Secunderabad to take care of the training needs of IRAS Accounts Officers and Supervisors. This is expected to become functional by March, 2005. Further, two more proposals are under consideration for setting up a chair on Railway Finance in one of the IIMs and establishing an Institute for exchange of ideas on professional matters and for continuous upgradation and honing of skills.

 

          Apart from training and challenges that the service provides, the morale of a cadre depends upon the opportunities that its members get to serve at the highest levels in the parent organization and in the Central Government. When we celebrated our Golden Jubilee in 1980, there was a feeling that in spite of being closely associated with all areas of Railway administration, the members of the Service were denied the posts of DRM and GM. It is heartening to note that this aspiration has since been fulfilled though to a limited extent. However, those of us who are aspiring to serve the Government of India outside the Railways have found the opportunities gradually shrinking. Only very few IRAS officers now get an opportunity to work at Joint Secretary levels and above, under Central Deputation. Even the posts of Financial Advisors in various ministries are not that freely available to Organized Finance Services, much less to IRAS as it used to be about a decade ago. IRAS has a vast pool of talent and experience, and there is a feeling that his has not been utilized to the full extent. In the years ahead these concerns will have to be addressed. I seek Hon’ble FM’s intervention in the matter.

 

But these issues should not cloud the real objective of the Service. And that is providing excellent service to the Organization that has given us reason to be proud of our achievements not only on Indian Railways but outside as well.

 

          The future is full of challenges as well as opportunities and the Service has to be prepared not only to face all the new developments but also to bring about changes in the system to make Indian Railways a front runner in providing the appropriate support by way of infrastructure to meet the growth anticipated in a buoyant economy. I can assure that IRAS, with its inherent strengths and resilience is fully geared to meet the emerging scenario!

 

          I once again welcome all the dignitaries as well as distinguished invitees for this historic occasion!