CAG Questions Utility Behind Railways' Much-Trumpeted Marhowra Locomotive Plant

In a report recently tabled in parliament, the national auditor has also red-flagged the role of private ticket vendors in depositing banknotes in the aftermath of demonetisation.

Diesel locomotive. Representational image. Credit: Wikimedia Commons

Arun Kumar Das

New Delhi: The Comptroller and Auditor General of India has punctured Indian Railways’s narrative around its new diesel locomotive manufacturing unit at Marhowra, observing that a new diesel factory was not necessary and that “incurring a huge liability of Rs 17,126.08 crore is not in sync with the vision of the railways as the diesel locomotives available with the railways are sufficient in numbers to take care of the present needs.”

In a new report, the national auditor has also ticked off the state-run transporter for serious lapses in its ticketing operations and account record in the days and months after demonetisation as it has found “undue advantage” being taken by private ticketing operators during that period.

As The Wire has reported, the Marhowra plant has been a source of controversy, with many within the government believing it to be unnecessary. It has nevertheless been treated with sensitivity as it is seen as a pet project of Prime Minister Narendra Modi’s Make in India initiative.

In a report recently tabled in the parliament for the year ended March 2017, the CAG has highlighted deficiencies and irregularities noticed during its audit on several areas including deposits during demonetisation, the railways’ flexi-fare scheme and mismanagement in commercial utilisation of its surplus land and parking lots near stations.

Taking note of ticket sales during demonetisation, the auditor found that the facility provided by the government to allow transactions at ticketing counters and depositing of specified bank notes with the railway was misused.

The CAG notes that 132 jansadharan ticket booking sewaks (JTBS) in “six Zonal Railways” took undue advantage of the facility provided by the government to allow transactions at railway ticketing counters and deposited specified bank notes with the railways post-demonetisation instead of depositing the cash in the banks.

These JTBSs deposited large amounts of cash with railways in denotified denominations instead of depositing the same in the banks.

The Centre demonetised currency notes of denomination of Rs 500 and Rs 1,000 on November 8, 2016 and these notes ceased to be legal tender on and from November 9, 2016.

On November 9, however, the Railway Board clarified that the specified bank notes could continue to be used as legal tender until November 11 to the extent of transactions at railway ticketing counters for the purchase of tickets, for which complete records were required to be maintained.

However, strangely, no specific directives/instructions were issued by the railway board with respect to cash deposited by the JSTBs.

Why diesel?

On the Marhowra plant, CAG noted that railways had proposed a diesel locomotive manufacturing unit in Bihar in September 2006. The contract was awarded to M/s GE Global Sourcing India Pvt. Ltd in November 2015 for setting up a unit along with maintenance depot at Roza and Gandhidham.

As almost a decade elapsed between the proposal and the contract being awarded, the necessity of setting up a diesel locomotive manufacturing unit should have been reassessed, CAG observed.

Its audit analysis showed that the diesel locomotives available with the railways are sufficient in numbers to take handle current needs.

The railways is planning complete electrification of its broad gauge routes by 2021 and would run freight trains in dedicated freight corridors (DFCs) on electrified routes.

Even if 100% electrification is not achieved, it is expected that most of the high traffic routes would definitely be electrified and the need for diesel traction would remain only for low traffic routes, for which high horsepower diesel locos are not likely to be used in an optimal manner.

Consequently, the need for high power diesel traction in Indian Railways is going to diminish in the years to come.

Indian Railways has realised this eventuality and decided to significantly reduce the production of diesel locomotives at Diesel Locomotive Works (DLW), Varanasi from 2018-19 onwards. Also, the production plan of Diesel Loco Modernisation Works (DMW), Patiala, does not include any plan for production of diesel locomotive in 2018-19.

As such, the diesel locomotives procured under this agreement would have no scope for productive utilisation in the Indian Railway network in future, CAG observed.

The railways itself has decided to significantly reduce in-house production of diesel locomotives at its Varanasi factory from 2019-20 onwards.

“Thus, setting up of a new infrastructure for production of diesel locomotives and incurring a huge liability of ` Rs 17,126.08 crore is not in sync with the overall strategic vision of Railways,” the CAG report stated.

Arun Kumar Das can be contacted at akdas2005@gmail.com.