P a g e| 1 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 Advance Planning of works programme: ThepreparationoftheannualWorksProgrammeofaRailwayisnotan isolatedexercisefortheyear,butispartofacontinuousplanningprocess from the level of the Divisional Officer upwards.Investment proposals emanating from the Division would be those which are intendedtoeffectimprovementinoperationorremovebottlenecksetc., within the Division itself.MajorinvestmentproposalswhichbenefitaZonalRailwaySystemorthe IndianRailwayaswholeshouldbecoordinatedandplannedatthelevelof the Railway Headquarters or the Railway Board, where necessary.Animportantrequirementforeffectiveinvestmentplanningistherealistic estimation of project costs.Fulldetailsoftheschememustbeworkedoutandnoschemeshouldbe includedintheRailway'sWorksProgrammeunlessdetailedplansand estimates have been prepared and are ready.Detailed Traffic and Engineering surveys should be carried out for new lines, gauge conversions doublings and for other line capacity works costing more than Rupees Five Crores each.In the case of yard remodeling, line capacity works i.e., goods shed facilities andimportantbuildingstheestimatesshouldbebasedonplansapproved andsignedbytheconcerneddepartmentswhoshouldscrutinizetheplans carefullytoavoidtheneedformakinganysubstantialmodificationsinthe required facility at a subsequent stage. Ifmajorchanges intheplans/schemes/specificationsofworksnevertheless becomenecessaryandarelikelytoleadtosubstantialexcessesoverthe sanctionedestimatesthechangesaskedforbytheconcerneddepartments shouldnotbeagreedtounlessreviewedandapprovedbythecompetent authority sanctioning the original estimate. Inregardtoproposalsfornewmarshallingyardsgoodsterminals,and transshipyardsetc.,workstudyteamsshouldgointotheactualworking before formulating schemes for the additional facilities required.It is an essential feature of the railway system as a commercial undertaking thatexpenditure,otherthanthatwhollychargeabletoordinaryRevenue, P a g e| 2 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 incurredonnewassetsorforimprovementofexistingassetsshouldbe financially justified before it is incurred.Detailedfinancialimplications(includingfinancialreturn)shouldbeworked outinallcasesincludingworksfinancedfromDevelopmentFund,Accident Compensation,SafetyandPassengerAmenitiesFundorOpenLineWorks Revenue. If the prescribed return is found to be not obtainable on the anticipated level oftraffic,theRailwayAdministrationshouldexaminewhethertheproposal cannot be reduced in scope, or given up in favour of some other alternative, or postponed until traffic prospects improve.Whenanumberofworkshavetobecarriedouttoachieveacommon objective, the financial implications or justification should be worked out for the entire scheme as a whole.ScrutinyofSchemesbeforepreparationofPreliminaryWorks ProgrammeAllschemescostingRs.20lakhsoraboveshouldbeworkedout comprehensivelyandsenttotheBoardalongwithfulldetailsof(i)the technicalfeatures,(ii)Costbreak-up.(iii)Benefitexpectedtoaccrueand (iv) financial implications.A sketch map of each proposal should also be sent.TheRailwayAdministrationmustclearlybringoutthepurposeofeach scheme and confirm that the proposal meets the objective fully and that the scope and cost of the project have been arrived at after the fullest possible investigation including assessment of the financial implications.AftertheschemeshavebeenscrutinizedbytheBoard,theRailway Administrationsshouldbeadvisedoftheacceptance,withorwithoutany modifications for inclusion in the Works programme.TrackrenewalproposalscostingRs.20lakhsandaboveareinitially scrutinized by the Board, keeping in view the availability of permanent way materials,progressoftheworksalreadysanctionedandothertechnical factors.ForthispurposetheRailwayAdministrationsshouldsendalltrackrenewal proposalscostingRs.20lakhsandabovetogetherwithtechnicaldatalike P a g e| 3 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 trafficdensity,age,conditionsoftrackcomponentsetc.,intheform prescribed by the Board to reach the Boards office by the stipulate date.After the proposals are screened by the Board, guidelines are issued to the Railway Administrations to reframe their proposals for inclusion in the Works Programme.Preparation of the Preliminary Works ProgrammeTheChiefEngineer oftheRailwaywill beprimarilyresponsible forensuring that the proposals prepared by the various departments are complete in all respects and are correctly prepared.The overall priorities within the ceilings given by the Board will also be fixed byhiminconsultationwiththeGeneralManagerandotherHeadsof Departments.Hewillberesponsibleforthepreparationandtimelysubmissionofthe Preliminary and the Final Works Programme.InoraboutJune/JulyeachyeartheRailwayBoardshouldconveytoeach Railway,inrespectofeachPlanHead,thetotaloutlaywithinwhichthe Works Programme should be framed by the Railway.OnreceiptofthisfinancialceilingtheRailwayadministrationsshouldtake stock of the schemes already formulated and those under consideration and select for inclusion in the Works programme within the financial ceiling such worksasareexpectedtoyieldthemaximumbenefittotheRailway, preference being given to works in progress.Further necessary changes in the investment schedule may be made in order toworkwithinthefinancialceilingfortheyearsuchmodificationsbeing taken note of in framing the preliminary Works Programme and revising the financial implications, if necessary.ThePreliminaryWorksProgrammeforthefollowingyearshouldbe submitted bythe Railways totheRailwayBoardby1stweekofSeptember or such earlier date as may be laid down by the Board.ProperfinancialappraisalofeachworkshouldbegiveninthePreliminary Works Programme together with the comments of the Financial Adviser and Chief Accounts Officer.P a g e| 4 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 The project cost should be based on firm data both as to quantity and rates atcurrentpricelevels,andshouldanyincreaseoccurinpricesduringthe periodinterveningbetweentheinitialpreparationoftheprojectestimate anditsinclusionintheworksProgramme,theestimateshouldbeupdated taking into account any significant changes in the wages and material prices as well as increase in freights and fares.Nootherincreasesuchasonaccountofchangeinscopeoftheproject should be allowed without prior reasons being adduced for acceptance by the RailwayBoard.Asketchshowingtheproposalshouldaccompanyeach proposal.Each investment proposal should be accompanied by a detailed plan showing theschedulingoftheprojecttomatchthetrafficrequirementsandthe financialoutlayproposedfortheyearshouldbeinaccordancewiththis project schedule to enable the Railway Board to arrange for a realistic funds allocation for implementation of the programme.IndecidingtheoutlaysforthevariousworksRailwayAdministrationsmust endeavor to progress all works in progress speedily and bring them into use at the earliest possible date.Aworkwhichhasbeensanctionedandforwhichfundshavebeenallotted whether in the original or supplementary budget of a year should be treated asa"workinprogress"forthenextyearandprovidedforassuchinthe programme. Such works should be grouped. TheRailwayAdministrationsshouldmakearealisticassessmentofthe amountrequiredforeachworkinprogressandnecessaryprovisionshould be made for it in the Works Programme.Inestimatingtheprovisionforworksduringthebudgetyearagenerous allowanceshouldbemadeforthosedelaysinexecutionwhichthough unforeseenareknownfromexperiencetobesoliabletoariseparticularly prior to inception and during the initial stages of large projects. Theprovisionmadeshouldtakeintoaccountadjustmentofchargeson surveys connected with a project.Inexhibitingtheoutlayforthecurrentyearagainstindividualworksin the works programme, the outlay should be as per Pink Book, and in exceptional cases where the Railways propose any substantial increase in the outlay with correspondingreductionsagainstotherworks,suchrevisedoutlaymaybe P a g e| 5 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 shown separately in brackets below the outlay as furnished in the Pink Book dulyexplainingthereasonsfordoingsoinfootnotesattheappropriate places. As far as possible only the last sanctioned costs should be exhibited. Wherever it is visualized that the cost would involve an excess over the last sanctionedcost,effectivestepsshouldbetakenwellintimetohavethe revised estimate prepared and sanctioned by the competent authority before the Works Programme is sent to the Board.Incasewheretherevisedestimatesaresanctionedsubsequenttothe dispatch of the final Works Programme but before the end of January of the following years the same should be promptly advise to the Board to enable to the latest sanctioned cost being exhibited in the Pink Book to be circulated along with the Budget.In all case of revised costs sanctioned by the Board, reference to the letter of sanction should invariably be indicated.WorksonceintroducedthroughaWorksProgramme(includingTrack RenewalProgramme)andtakenupaftertheestimateshavebeen sanctioned by the competent authority should continue to be included every yeartilltheyarefinallycompleted,exceptincasewheretheworkshave reached the completion stage andwhere fundsrequired if meager could be found by re-appropriation.The Works Programme is compiled in the following format:-Form E. 618WORKS PROGRAMME 2015-16 Demand No............................... Figures in thousands of rupees)Item No. AuthorityParticulars of Works Cost Expenditure to end of 3/15 Outlay for Balance2014-15 2014-15 12345678 Note:- Years have been shown in the form for the purpose of illustration.In respect of "Works in Progress" reference to item No. of the current years PinkBookandalsotheauthorityunderwhichtheworkwasfirststarted should be indicated. The works should be arranged as per the Plan Heads.P a g e| 6 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 TheitemsintheWorksProgrammeshouldbegroupedunderthefollowing categories while compiling the Works Programmes:-(i) New Works.(ii) Works in Progress.(iii)Worksapprovedinearlieryears,whichhavenotbeenactually commencedandonwhichnoexpenditurehasbeenincurredtill 30th June of the year previous to the Programme year.(iv)Worksapprovedintheearlieryearsbutestimatesforwhichhave notbeensanctionedby30thJuneoftheyearprevioustothe Programme year.The works are further made into sub-groups of (i) Works costing more than Rupees Five Lakhs each and (ii) Works costing up to Rupees Five lakhs each. Under(ii)workscostinguptoRupeestwolakhseachinthecaseofTrack Renewal works and for works costing up to Rupees one lakh each in the case ofotherworksonlylumpsumprovisionshouldbeshownwithoutdetailing individual works.Within each sub-group, the works are presented under each Plan Head.A map showing the Railway System and indicating the new lines, doublings, major yardremodellings, important line capacity and signaling workswhich areinprogressaswellasproposedshouldbeattachedtotheWorks Programme.An alphabetical index of works and various managerial information regarding criticalmaterials,expenditurepositionrelatingtopassengersandrailways usersamenitiesetc.whichwillbeprescribedbyRailwayBoardshouldbe included.Integrated Budget.-The Annual Budget of Railways consists of assessment ofearningsandexpenditureformingpartofRevenueBudget,andthat relating to the investment decisions taken through the Works Machinery and Rolling Stock Programmes.Inordertoco-relatethedecisionsrelatingtoalltheseaspects,a consolidatedbudgetcalledintegratedBudgetincludingRevenueBudget, Works Programme and the Machinery and Rolling Stock Programmes should be submitted by the Railways along with the preliminary Works Programme.P a g e| 7 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 TheIntegratedBudgetwillincludetheprojectionsoftrafficandearnings, worksworkingexpenses,theestimatedfinancialresultsfortheensuing year, and the operating ratio in the proforma specified by the Railway Board.TheRailwaysshouldalsofurnishthedetailsofRollingStockrequiredon replacementaccountandadditionaccount,dulyco-relatingittothe anticipated increase in traffic.In the covering note to the integrated Budget, the Railways should bring out theeffectofthebudgetproposalsontheefficiencyofoperationsas indicatedbytheoperatingratioandthefinancialviabilityofthesystemas revealed by the financial returns on capital investment.AfterdiscussionofthePreliminaryWorksProgramme,arevisedIntegrated BudgetshouldbesubmittedalongwiththeFinalworksProgrammeduly takingintoaccountthechangesthatmighthavetakenplaceinthemean time.The Integrated annual budget may be prepared under the personal guidance oftheGeneralManagerandwiththeassistanceofFinancialAdviserand Chief Accounts Officer.Final Works ProgrammeAfterhavingexaminedtheindividualRailwaysProgramme,anddiscussions withtheGeneralManagers,theRailwayBoardwilldecidetheworkswhich shouldbeundertakenduringthefollowingyearandwhichshouldbe included in the Final Works Programme.TheRailwayAdministrationgiveswillthenmodifytheirWorksProgrammes as a result of the Board's decision and send their Final Works Programme to the Railway Board by the stipulated date. Works BudgetWorksBudget.--Therevisedandbudgetestimatesfortheconstruction, acquisition and replacement of assets are briefly known as Works Budget.The revised estimate gives an estimate of funds required for the current year and the budget estimate refers to the following year.ThebudgetestimatefortheworksarebasedontheWorksProgramme approved by the Board.P a g e| 8 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 Therequirementoffundsbothfornewinvestmentsandforworksin progressaresubmittedintheformof"DemandforGrants"intheWorks MachineryandRollingStockProgrammewhichformsapartoftheBudget papers presented to the Parliament.WhilecompilingtheWorksMachineryandRollingStockProgrammefor presentationintheParliamentonlyworkscostingRupeesfivelakhsand above are itemized.Demand for Works GrantsTheproposalofGovernmentinrespectofsumsrequiredtomeetthe expenditure from the Consolidated Fund of India are to be submitted in the formofDemandsforGrantstotheParliament.TheDemandshallbefor grossexpenditure,thecreditsorrecoveriesbeingshownintheformof footnotes to Demands.The Demand for Grants for the Works Budget is:Demand No.16: Assets-Acquisitions, Construction and Replacements.Financing of Works BudgetWorkschargeabletoDemandNo16.Assets-AcquisitionsConstruction andReplacementsare financedfromrailway revenue whenitischargedto OLWRorfinancedfromCapital,DepreciationReserveFund,Development Fund, Accident Compensation Safety and Passenger Amenities Fund.Expenditurebudgetedunder"capital"involvesincreaseintheCapital-at-charge of the Railways and hence is the liability for payment of dividend to General Revenue subject to the relief/exemptions granted by the Convention Committee."Works expenditure" of the Railway is thus financed from Revenue, Railway Funds and Capital provided by the General Revenues.TheRailwayFundsareDepreciationReserveFund,DevelopmentFundand Accident Compensation Safety and Passenger Amenities Fund.Intheeventoftherailwaysrevenuesurplusnotbeingadequatetofully meettherequirementsofDevelopmentFundExpenditure,thebudgetary supportfromtheGeneralRevenueswouldalsoincludetemporaryloansto finance expenditure from the Development Fund.P a g e| 9 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 TheexpenditureunderworksBudgetoftheRailwaysis,therefore, determined by the resource allocation under various Plan Heads.CreditsorRecoveries.Therearecertaincreditsorrecoverieswhichare excludedfromthescopeoftheDemandspresentedforvoteofParliament, Though these credits or recoveries are outside the scope of the Grants, they are booked in accounts as reduction of expenditure, e.g. credit for released materials.A list of credits or recoveries which should be excluded from the scope of the Demand should be sent in Form 335F along with the revised estimates of the current year and budget estimates of the ensuing year under each Demand.Distribution of Funds by the Railway Board. The Grants as voted by the Parliament and the appropriations for charged expenditure as sanctioned by thePresidentaredistributedbytheRailwayBoardamongtheRailway Administrationsandotherauthorities,subordinatetothemassoonas possible after the Budget is sanctioned.The sums so distributed are called "Allotments" and the orders by means of which the allotments are made are called "Budget Orders".TheallotmentsmadeoutoffundsvotedbytheParliamentareshownas "Voted" and those fixed by the President are shown as "Charged".TheBudgetOrdersareaccompaniedbythefinalissuesof"Demandsof Grants"and"WorksMachineryandRollingStockProgrammes",containing thedetaileddistributionoftheBudgetallotmentmadetorailway administrationsforworkingexpensesandCapital,DepreciationFund, Development Fund, Open Line Works (Revenue) and Accident Compensation, Safety and Passenger Amenities Fund expenditure.The Budget allotment made to railway administration is intended to cover all charges including the liabilities for past years tobe paidduring theyear or to be adjusted in the accounts for it.It shall be operative until the close of the financial year.Anyunspentbalanceshalllapseandshallnotbeavailableforutilisationin the following year.Inthe eventofthe BudgetOrders oftheRailwayBoardnotbeing received before the commencement of the financial year, the railway administrations P a g e| 10 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 are empowered to incur expenditure pending the receipt of the Budget Order on works which were in progress at the end of the previous financial year.All expenditure incurred under this must be treated as a charge against the allotments eventually made for such works.When the Budget Orders issued by the Railway Board show any reduction in the estimate originally submitted to them, prompt measures should be taken bytherailwayadministrationstolimittheexpendituretotheamounts allotted and distributed by the Railway Board.General Rules on BudgetPlanningforSurveys.Assurveysfortheinitialstepofinvestment planning, the programme of surveys requires to be planned in advance and reviewedalongwiththeinvestmentdecisionsbeingtakenintheannual Works Programme meeting being held in Railway Board Office.Aseparatestatementindicatingthesurveysinprogressandthenew surveys proposed to be undertaken should be prepared and included in the Railway Works Programme being submitted to the Railway Board.Theneedforeachsurveyshouldbeclearlystatedbringingoutinteralia whether the same survey was proposed earlier and if so with what results.Thecostofsurveysorpreliminaryinvestigationstoexaminethefeasibility andprospectsofnewlineconstructionsandotherprojectsischargedto DemandNo.2whichisaRevenueDemand.Allsurveyscostingmorethan Rs. 1 lakh require prior approval of Parliament.If the construction of a project is undertaken, the expenditure on the Survey istransferredtoCapitalorotherappropriateheadsbyCreditstoRevenue, irrespective of the year in which the expenditure was originally incurred.Thechargesonsurveysaremostlymadeupofthepayandallowancesof staff,costoftransport,costofmathematicalandotherinstrumentsand camp and office equipage.Theallowancefordepreciationonmaterialslikelytobeleftoveron completionofthesurveysshouldbemadeonascalejustifiedbypast experience.P a g e| 11 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 TheBudgetestimateofsurveysshouldprovideforanyadjustments necessaryundertherulesinrespectofsurveyspertainingtoaprojectthe construction of which has been or is to be taken in hand.The revised estimates of surveys for a year and the budget estimates for the ensuingyearbasedonthedecisionsarrivedatintheWorksProgramme meeting should be prepared in respect of each survey in the following form andsubmittedinduplicatesoastoreachtheRailwayBoardnot laterthan 1st December of the year to which the ""revised estimates" relate.Budget - A Constitutional and Management Document A statement of the estimated receipts and expenditure of the Government of Indiaforthatyearreferredtoasthe"annualfinancialstatement"and popularly called the "Annual Budget". Thoughtheconstitutionalrequirementisonlythatthe'financialstatement' shall contain a statement of the estimated receipts and expenditure for the comingfinancialyear,asamatterofpractice,everybudgetcontainsthree elements- a.Areviewoftheprecedingyear,includingtheactualreceiptsand expenditure in that yearb.An estimate of the receipts and expenditure of the coming year; and c.Proposals, if any, for meeting the requirements of the coming year. VotedandChargedExpenditure-Article112(2)oftheConstitution prescribesthattheestimatesofexpenditureembodiedintheannual financial statement shall show separately- (a)Thesumsrequiredtomeetexpenditurechargeduponthe Consolidated Fund of India; and (b) Thesumsrequiredtomeetotherexpenditureproposedtobe made from the Consolidated Fund of India. The expenditure proposed in the Budget may therefore be either (i) Voted or (ii) Charged. Article 113(1) of the Constitution provides that 'the estimates of expenditure chargedupontheConsolidatedFund ofIndiashallnotbesubmittedtothe vote of Parliament'. P a g e| 12 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 Thereis,however,norestrictiononeitherHouseofParliamentdiscussing any of these estimates, where after funds are sanctioned by the President. Article113(2)requiresthatestimatesofvotedexpenditure"shallbe submitted in the form of demands for grants to the House of the People (Lok Sabha) and the House of the People shall have power to assent, or to refuse to assent, to any demand, or to assent to any demand subject to a reduction of the amount specified therein". Article 113(3)enjoinsthatnodemandforagrantshallbemade except on the recommendation of the President. Charged Expenditure -In respect of Railways, the following expenditure is "charged" on the Consolidated Fund of India- i.Thesalary,allowancesandpensionpayabletoorinrespectofthe Comptroller and Auditor General of India; ii.Anysumsrequiredtosatisfyanyjudgment,decreeorawardofany Court or awards by Arbitrators where made into rule of court ; and iii.AnyotherexpendituredeclaredbytheConstitutionorbyParliament by law to be so charged. ApartfromitssignificanceasaninstrumentofParliamentaryfinancial control,theRailwayBudgetisanimportantmanagementtool.Broadlythe financial forecast in the Budget is related to the performance targets set for RailwayAdministrations,anditistheresponsibilityoftheRailway Managements to ensure the achievement of these associated targets. Canons(Standards)offinancialpropriety:Intheexerciseoftheir financialpowers,thesanctioningauthoritiesmustpaydueregardtothe following principles: (1)Theexpenditureshouldnotprimafaciebemorethantheoccasion demands,andthateveryGovernmentservantshouldexercisethe same vigilance in respect of expenditure incurred frompublic moneys asapersonofordinaryprudencewouldexerciseinrespectofthe expenditure of his own money. (2)Noauthorityshouldexerciseitspowersofsanctioningexpenditureto pass an order which will be directly or indirectly to its own advantage. P a g e| 13 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 (3)Publicmoneysshouldnotbeutilizedforthebenefitofaparticular person or section of the community unless (i) The amount of expenditure involved is insignificant; or (ii)A claim for the amount could be enforced in a court of law; or (iii) The expenditure is in pursuance of a recognized policy or custom. (4)Theamountofallowances,suchastravellingallowances,grantedto meet expenditure of a particular type, should be so regulated that the allowances are not on the whole sources of profit to the recipients. Sinking Fund: A fund established to produce a desired amount at the end of a given period of time by means of a series of payments throughout the period is called a sinking fund. The expression_____1_____ (1+i) n-1 is called the sinking fund deposit factor ( denoted as sff). DCF Discounted cash flow ROR Rate of return. Discounted Cash Flow: Theaccounting'RateofReturn'(R.O.R.)methodcommonlyinuseonthe Railways does not take into account the time value of money. Also, the return on investment is worked out as at the time of completion of theprojectoratasinglepointoftime(6thyearor11thyear)andnot through the entire useful life of the project. TheR.O.R.methodmay,therefore,yieldanincorrectresultdependingon the point of time selected for the purpose of project appraisal. Afactoroffundamentalimportancetoinvestmentdecisionsandonewhich theR.O.R.methoddoesnottakeintoaccountisthetimingofprofitsand cashflowsthatresultfromaninvestmentandthisfactoriscrucialtothe Discounted Cash Flow Method of project appraisal. P a g e| 14 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 Preparation of the Budget: For the preparation of the Budget by the Railway Board, the Railway Administrations and other authorities empowered to incur expenditure are required to submit to the Railway Board their revised estimates for the current year and budget estimates for the following year on the dates prescribed below :- Estimate of Earnings - 20th December Revenue Demands 2 to 15 - 1st December Civil Estimates - 15th December Works Demand 16 - 23rd December The revised estimates are required in respect of the current year and Budget Estimates for the following year. DEMANDS FOR GRANTS TheproposalsofGovernmentinrespectofsumsrequiredtomeet expenditure from the Consolidated Fund of India are to be submitted in the form of "Demands for Grants" to the Lok Sabha. The Demands shall be for gross expenditure; the credits or recoveries being shown in the form of footnotes to Demands. Salient features of restructured Demands for Grants are as under: i.Expensesarebroadlygroupedbyactivitiesasanaidtodeveloping budgets and analyzing actual expenses against budgeted expenses. ii.TheDemandsNo.1,2&3areinthenatureofgeneralon-cost, Demand 1 & 2 covering all Railways and Demand 3 individual Railway Administrations. iii.There is a single works Demand for all works Expenditure irrespective of source of financing. iv.EachDemandhastwo-wayclassificationbyactivityandbyPrimary unitsofexpenditure.Theactivityclassificationidentifies'why'an expense item is incurred. The behavior of costs in relation to changes intrafficvolumesateachactivitylocationthusprovidesadatabase for revising the budget in response to changing volumes of output. The primary unit (object) of expenditure on the other hand, identifies 'what' the expense item denotes, i. e., by way of labour, materials etc. Such a breakdown facilitates concurrent cost and budgetary control for P a g e| 15 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 itpinpointsthetypesofexpensesonwhichtheorganizationalunit should concentrate to improve its performance. The primary units also indicatethecategoriesofexpensesthatwouldbeusedbyany organizationalunittoprepareitsbudgetandmonitorthevariances from the norms set up by it. v.TheBudgetclassificationshavebeencompletelyalignedwiththe Accounting classifications. PREPARATION OF BUDGETS BY RAILWAY ADMINISTRATIONS. Responsibility for framing the Estimates.-PreparationoftheRevisedandBudgetEstimatesshouldcommenceatthe 'grassrootlevel,i.e.,Division,Workshop,StoresDepotetc.,asthecase maybe.Theentireresponsibilityforframingtheestimatesdevolvesupon thespending/earningauthoritiesconcerned,thoughtheactualworkof compilationandscrutinywouldrestwiththeFinancialAdviserandChief Accounts Officer who would also draw the attention of the General Manager to matters of purely financial import. The estimates should be as accurate as possible and, to achieve this object, care should be taken to see that the data on which the forecast is based is adequate and reliable and that the conclusions arrived at from the data can be sustained by past experience and future expectations of likely events. Nostereotypedmethodofestimatingwillbehelpfulinforecasting accurately,unlessthedataonwhichtheforecastisbasedisselectedwith due care and all the useful knowledge is brought to bear on the conclusions to be derived from the data. The manner in which the data required for the preparationoftheestimateshouldbecollectedis,therefore,lefttothe GeneralManagers,butthegeneralprinciplesonthebasisofwhichthe variousestimatesshouldbeframedaredescribed,wherevernecessary,in the following paragraphs. TheRevisedandBudgetEstimatesshouldbeframedbythevarious concerned authorities in keeping with the instructions given below separately for- (i)Gross Receipts; (ii)Ordinary Working Expenses; (iii)Payments to Worked Lines; (iv)AppropriationtoandexpendituretobemetoutofRailway Funds; P a g e| 16 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 (v)Payment to General Revenues; (vi)Works Expenditure; and (vii)Civil Estimates Parliamentary control over Railway Finance: Indian Railways is owned, managed and controlled by Government of India. Therefore,parliamentcontroloverRailwayfinancethroughthefollowing methods: i.Railway convention committee. ii.Estimates committee iii.Public accounts committee iv.Committee on subordinate legislation. v.Committee on Government assurances vi.Railway Budget discussion vii.National Railway Users consultative council viii.References from Parliament members i.Railway convention committee: Constituted by parliament for every five years to review rate of dividend payable by Railway undertaking to generalrevenuesaswellasotherancillarymatterswhichhavea bearing on theneeds ofthe Railways and are essential for maintaining the operational efficiency and earning potential of railway earning so as to enable it to continue to pay the dividend. ii.EstimatesCommittee:Thecommitteeisaparliamentcommittee consistingofthirtymembersofparliamentasmembersofthis committeeandexaminessuchofestimatesasitmaydeemfitorare specially referred to it by Parliament or speaker. The functions are: a.Toreportwhateconomies,improvementsinorganization,efficiency oradministrativereform,consistentwiththepolicyunderlyingthe estimates may be effected. b.To suggest alternative policies in order to bring about efficiency and economy in administration. c.Toexaminewhetherthemoneyiswelllaidoutwithinthelimitsof policy implied in the estimate P a g e| 17 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 d.Tosuggesttheforminwhichestimatesshallbepresentedto Parliament. iii.Publicaccountscommittee:Thisisaparliamentarycommitteeon publicaccountsfortheexaminationofaccountsshowingthe appropriationofsumsgrantedbyparliamentfortheexpenditureof Government of India, the annual finance accounts of the Government of IndiaandsuchotheraccountslaiddownbeforetheParliamentasthe committee may think fit. iv.Committee on subordinate legislation: Whether the powers to make regulations, rules, sub-rules, bye-laws etc conferred by the constitution ordelegatedbyParliamentarebeingproperlyexercisedwithinsuch delegationornotarenotscrutinizedbythecommitteeonsubordinate legislation and a report is prepared for submission to Parliament. v.CommitteeonGovernmentAssurances:Thiscommitteescrutinizes whethertheassurances,promises,undertakingsetc.,givenbythe ministersfromtimetotimeonthefloorofLoksabhaandRajyasabha havebeenimplementedwithintheminimumtimenecessaryforthe purpose. vi.Railway budget discussion: During the budget session of parliament, Railwaybudgetisplacedintheparliament,usuallyafewdaysbefore the presentation ofgeneral budgetinFebruary.Thereafterthe Railway budget is discussed and debated in the parliament of both houses. They raise questions of different natures such as starred questions, unstarred questionsandshortnoticequestionsintheLSandRSandrailway ministergivessuitablereplies.Debateandquestionsaretwomain weapons through which parliamentary control is exercised over Railway financeandbudget.Afterthebudgetisdiscussedanddebated,the railway budget is passed by both houses of parliament. vii.NationalrailwayUsersConsultativeCouncil:Tosecurebetter representation of Railwayusersand afford morefrequentopportunities for consultation between Railways and railway users on matters relating to the service provided by Railways, NRUCC formed in 1953.Thecouncilconsistsof70personsappointedtoitbyrailwayminister drawnfromvariousconcernedSecretariesofMinistries,Chairmanand members of Board, MPs, Representatives of ZRUCC, One representative from Chamber of commerce and other eminent members.P a g e| 18 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 The function of council is to consider the services and facilities provided by Railways. viii. References from MP: Letters are often addressed by MP to Ministers, membersofBoard,GMsandHODsinconnectionwithvariousissues including finance and policy. Inviewoftheabove,itcanbesaidsafelythatparliament exercisesexcellentcontrolovertherailwayfinancethroughdifferent machinerieswithaviewtoensurethatgovernmentmoneyisproperly utilized and the working is in the direction of public interest. Budget reviews: ABC analysis: Under this method, all the stock items have been categorized under three groups according to their annual usage values. The idea of this categorizationisthatitemsinvolvingmostcostshallbemostcarefully controlled whereas items little value will have any control.

Material modification: Minor changes in the sanctioned estimate of a work or scheme which are prohibited by the railway Board and which require their approvalaretermedasmaterialmodification.Thiswillcauseduechange inalignmentoflines,introduction/omissionofstations,changeinlayoutof yard, introduction of new sub-work etc. Depositworks:Worksofconstructionorrepair,thecostofwhichismet notoutofrailwayfundsbutoutoffundsfromnonrailwaysources,but worksexecutedbyarailwayforothergovernmentdepartments, municipalitiesandotherlocalbodiesandprivatefirmsandindividualsare called deposit works. Measurementbook:Itisanimportantandcollectiverecordof measurements jointly recorded by concerned authority to whom the book is issuedforpreparingthecontractorsbillswhichformbasisforpaymenton accountofsupplymadebythemorworksexecutedbythem.Important points to be noted while maintaining the M books: 1.Booksshallbeserialnumberedanddateofissueandtowhom issue shall be recorded. P a g e| 19 of 19 Compiled by Srinivasa Rao Guduru, 9440346478 2.Books not in use to be withdrawn. 3.All the measurements of work shall be recorded in M Book only. 4.Separate Mbook for each largeworkor two or more books as convenient may be used. 5.Pages shall be machine numbered. 6.Entries shall be made in ink. 7.Entriesshallbecontinuouswithnoblankpagesandanypage left blank shall be cancelled with diagonal lines. 8.Anyincorrectwordsorfigurescanbecorrectedandthe correction shall be endorsed with initials.9.Entryshallbemadedirectlywhilerecordingwithoutcopying from the rough book. Inventorycontrol:Inordertoensureregularavailabilityofmaterialfor productionforproduction,asalsoforrepairandmaintenance,any undertaking would have to keep substantial quantity of stores as inventory. Sincethisiscompulsivenecessity,oneofthemostimportantelementsfor ensuringeffectiveandprofitableoperationofanundertakingistohavean effectiveinventorycontrolsystem.Itshallensureneitherexcessivestock nor stock out. Inventorycontroloverrawmaterials,stores,supplies,spareparts,tools, components, assemblies, semi-finished and finished products. Thefunctionofinventorycontrolis to obtainthemaximuminventory turnover with sufficient stock to meet all requirements. X X X X X X X X X