INTRODUCTION

Railways continue to be t h e principal mode of transport in India. Much more than that, it has become a part and parcel of the country’s socio-economic life, impacting not only its culture and socio-economic activities but also largely influencing our art, history and literature besides unifying the people. Way back in 1853, wheels rolled on rails on 16th April, where the first ever railway t r a i n , carrying 400 people in 14 carriages, covered the 2 1 - m i l e distance between Bombay and Thane in about 75 minutes. The train took off with a regal 21-gun salute to celebrate the occasion. It started as a system to serve the colonial interests of the foreign master has developed into the main vehicle for socio-economic development of a welfare society. The Indian railways are a government concern as most of the capital invested on railways has been provided by the government, either by loans raised by it or from its own surpluses. They are a commercial concern in as much as they are engaged in manufacturing and in sale of “transport”, thus making profits and maintaining their own assets and paying dividend to the general revenues on the capital invested on the railway undertaking. It has become a part and parcel of the country’s socio-economic life, impacting not only its culture and socio-economic activities but also largely influencing our art, history and literature besides unifying the people. . It started as a system to serve the colonial interests of the foreign master

has developed into the main vehicle for socio-economic development of a welfare society.

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BUDGET
A statement of estimated annual receipt and expenditure whether, on capital or revenue account of central government is prepared by the railway board. In other words it can be said that under (article 112) of constitution of India, the president will call upon a statement from Railways showing the estimated income and the out-lay amount that has to cross the Consolidated Fund of India. These statements are known as 'Budget'. A budget is a detailed plan of operations of some specific future period. It is an estimate prepared in advance of the period to which it' applies. It acts as a business barometer as it is a complete programmer of activities of the business for the period covered. According to Gordon and Shilling law budget may be defined as "a predetermined detailed plan of action developed and distributed as-a guide to current operations and as a partial basis for subsequent evaluation of performance." The Chartered Institute of Management Accountants, London, defines a budget as "a financial and/ or quantitative statement, prepared prior for a defined period of time, of the policy to pursued during that period for the purpose of attaining a given objective."

NATURE OF BUDGETARY CONTROL
Budgetary control is the process of determining various budgeted figures for the enterprise for the future period and then comparing the budgeted figures with the actual performance for calculating variances, if any. First of all budgets are prepared and then actual results are recorded. The comparison of budgeted and actual figures will enable the management to find out description and take remedial measures at a proper time. The budgetary control is a continuous process, which helps in planning and co ordination. It provides a method of control too.

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According to J.A. Scott, "it is the system of management control and accounting in which all operations are forecasted and so far as possible planned ahead, and the actual results compared with forecasted and planned ones."

BUDGET, BUDGETING AND BUDGETARY CONTROL
A budget is a blue print of a plan expressed in quantitative--terms. Budgeting is a technique for formulating budgets. Budgetary control, on the other hand, refers to the principles, procedures and practices of achieving given objectives through budgets. According to Rowland and William have differentiated the three terms as; "Budget are the individual objectives of a department, etc., where as Budgeting may be said to be the act of building budgets.' Budgetary control embraces all and in addition includes the science of planning the budgets to affect an overall management tool for the business planning and control."

DIFFERENCE BETWEEN BUDGET & BUDGETTARY CONTROL
1. The budget is an act of planning whereas budgetary control is an act of controlling. 2. The budget concerns itself with the future. Budgetary control is

however concerned with the present activities although it is prepared on the basis of data collected from the past budget. But the activities that the budgetary control involves are not limited to that budget only. It is also related to the questions as to how far the budget can effectively utilized in future. 3. The budget fixes the target and budgetary control helps to arrive at that target.

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NEED OF THE STUDY
The budget control system helps in fixing the goals for the organization as whole as concerned efforts are made for its achievements. It enables economics in the enterprises. Budgetary control aims at the maximization of profit of the enterprises. The working of different departments and sections is properly coordinate. By providing targets to various departments budgetary control provides a tool for measuring managerial performance

PERIOD OF THE STUDY
The period of the study was five years i.e. from 2004-2009. The resarcher has analysed the financial year stetments of South central railways

SCOPE OF THE STUDY
Any work without boundaries result in ambiguous end. So this study has been confined to the Finance Department of South Central Railway, Vijayawada Division. South Central Railway is one of the Zones of Indian Railways and Vijayawada Division is one among the six Divisions of South Central Railway. The

information about financing strategies and policies are difficult to collect as the head office of South Central Railway as well as Railway Board mainly frames them. The study mainly concentrates on the budgetary aspects of Vijayawada Division.

OBJECTIVES OF THE STUDY

The main objective is to study the effectiveness of Revenue Budget in South

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Central Railway at Vijayawada Division.

To study the data relating to the actual preparation of Budget and find the deviations.

To study those areas of budget that are having big deviations between proposed and actual spending and to come out with effective solution that helps in reducing the gap between proposed and actual.

To Whom It May Concern: study the reasons for deviations by collecting the views from employees and others those who are related to budget operations.

To study the present financial position of the Division by making comparative analysis.

To give suggestions for the betterment of the organization

RESEARCH METHODOLOGYS
Research is an academic activity and as such the term should be used in a technical sense. According to Chifford woody Research comprises defining and redefining problems, formulating Hypothesis or suggested solutions; organizing and evaluation data, making deduction and reaching conclusion and. At last carefully testing the conclusions to determine whether they fit the formulating the hypothesis. Information and data presented in the report is collected from two sources. They are 1. 2. Primary Sources Secondary Sources

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Primary Source The primary data required for the study has been collected by personal interaction with employee offices and other concerned persons of Finance Division. Secondary Source The secondary data has been collected from 1. 2. 3. Annual reports Web sites Company journals

LIMITATIONS OF THE STUDY
The hindrances that came across during the period of my study and which show their effect on my study are mentioned below as the limitations of the study. Those are as follows:
1.

As railways consist of different zones the budget of one zone is linked with the budget of another zone, but i have consider only VJA division.

2. Due to the unavailability of current periods data i.e., 2009-10 the present year performance could not be analyzed. 3. A study on Revenue Budget does not reflect the whole financial position of the Division. 4. The time available to conduct the study was only 2 months. It being a wide topic had a limited time. 5. The time available to conduct the study was only 2 months. It being a wide topic had a limited time

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INDUSTRY PROFILE
Indian Railways abbreviated as IR, is a Department of Government of India, under Ministry of Railways and is tasked with operating the rail network in India. The Ministry is headed by a cabinet rank Railways Minister, whereas, the department is managed by Railway Board. Indian Railways is NOT a corporate body, as many people think. However, of late, IR is trying to adopt a corporate management style. Indian Railways had, until recently, a monopoly on the country's rail transport. It is one of the largest and busiest rail networks in the -world, transporting fourteen million passengers and more than one million tonnes of freight daily. IR is the world's largest commercial or utility, employer, with more than 1.6 million employees, and is second only in total terms to the Chinese Army. The railways traverse through the length and width .of the country; the routes cover a total length of 63,140 km (39,233 miles). As of 2002, IR owned a total of 216,717 wagons, 39,263 coaches and 7,739 locomotives and ran a total of 14,444 trains daily, including about 8,702 passenger trains. Railways were first introduced to India in 1853. By 1947, the year of India’s Independence, there were forty-two rail systems. In 1951 the systems were nationalized as one unit, becoming one of the largest networks in the world. Indian Railways operates both long distance and sub-urban rail systems Extent of Great Indian Peninsular Railway network in 1870. The GIPR was one of the largest r a i l companies at that tim A plan for a rail system in India was first put forward in 1832, but nofurther stepswere taken for more than a decade. In 1844, the Governor General of India

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Lord Hardinge allowed private entrepreneurs to set up a rail system in India. Two new railway companies were created and the East India Company was asked to assist them. Interest from investors in the UK l e d to the rapid creation of a rail system over the next few years. The first train in India became operational on TS51-12-22, and was used for the hauling of construction. Material in Roorkee. A year and a half later, on 1853-04-8 6, the first passenger train service was inaugurated between Bori Bunder, Bombay and Thana. Covering a distance of 34 km (21 miles), it was hauled by three locomotives, Sahib, Sindh and Sultan. This was the formal birth of railways in India. The British government encouraged new railway companies backed by private investors under a scheme that would guarantee an annual return of l i v e percent during the initial years of operation. Once established, the company would be transferred to the government, with the original company retaining operational control. The route mileage of this network was about 14,500 km (9,000 miles) by 1880, mostly radiating inward from the three major port cities of Bombay, Madras and Calcutta. By 1 8 9 5 , India had started building its own locomotives, and in 1896 sent engineers and locomotives to help build the Uganda Railway. Soon various independent kingdoms built their own rail systems and the network spread to the regions that became the modern-day states of Assam, Rajasthan and Andhra Pradesh. A Railway Board was constituted in 1901, but decision-making power was retained by the Viceroy, Lord Curzon. The Railway Board operated under aegis of the Department of Commerce and Industry and had three members: a government railway official serving as chairman, a railway manager from England and an agent of one of the company railways. For the first

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time in its history, the Railways began to make a tidy profit. In 1907, almost all the rail companies were taken over by the government. The following year, the first electric locomotive appeared. With the arrival of the First World War, the railways were used to meet the needs of the British outside India. By the end of the First World War, the railways had suffered immensely and were in a poor state. The government took over the management of the Railways and removed the link between the financing of the Railways and other governmental revenues in 1920, a practice that continues to date with a separate railway budget. The Second World War severely crippled the railways as "trains were diverted to the Middle East, and the railway workshops were converted into munitions workshops. At the time of independence in 1947, a large portion of the railways went to the then newly formed Pakistan. A trial of forty-two separate railway systems, including thirty-two lines owned by the former Indian princely states, were amalgamated as a single unit which was christened as the Indian Railways. The existing rail networks were abandoned in favor of zones in 1951 and a total of six zones came into being in 1952. As the economy, of India improved, almost a l l railway production units were indigenized. By 1985, steam locomotives were phased out in favor of diesel and electric locomotives. The entire railway reservation system was streamlined with computerization in 1995. Indian Railways, the premier transport organization of the country is the largest rail network in Asia and the world's second largest tinder one management.

Indian Railways is a multi-gauge, multi-traction system covering the following.

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Broad Gauge Meter Gauge Narrow Gauge

(1676mm) (1000mm) (61 0 and 762mm)

83073 km 20343 km 4027 km

Since then the railways have spread over different corners of India and at the beginning, the task of railways was entrusted the individual companies. Now all the major railways are owned and managed by the Govt. of India. Even today there are some railways, which are managed by some private companies. "Railway" means a railway or any portion of a railway 'for the public carriage or passengers or goods and includes.

All land within the fences or other boundary indicating the limits of the land appurtenant to a railways.

A l l l i n e s of railway, siding or branches worked over for the purpose of or in connection with a railway.

All stations, offices, warehouses, workshops, manufactories, fixed plant and other works constructed for the purpose of, or in connection with railway. The Indian Railways are one of the largest systems in the world. It provides the principle mode of transport for fright and passenger's. It has played a vital role in the Economic, Industrial and social development of our country. There is no better way to witness India, than to view the changing scenes from a carriage window of a train. Through British .laid most of the 38525 miles (62000 KMS) of track, if was assumed the end of colonial rule in India, marks the beginning of travel as you please.

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OBJECTIVES OF THE STUDY
The corporate management objectives of railway undertaking are as under. To provide transport for both passengers and goods adequate to meet demand in areas where railway operation confers optimum benefit to the economy having due regard to the government's policy of development of back ward areas.
  

To provide such rail transport at the lowest cost consistent with Requirements of the railway users and safety of operation Adequate provision for replacement of assets and son e provisions for development of business, and

 

The least amount of pollution of environment. To work in association with or utilize other needs of transportation, such as pipe lines and road transport, and to engage in railway

activitiesnecessary to sub serve the above two objectives; and

To establish corporate image of the railways as being an up-to-date business organization with the interest of .public and of the nation as i t s prime objectives; and

To develop organizationally effective personnel with pride in their work and faith in the management.

INNOVATIVE TECHNOLOGIES BY KONKAN RAILWAYS
Konkan Railway Corporation (KRC), the technological marvel of Indian Railways, has invented quite a few new technologies" Anti Collision device (ACD), state-of-art indigenous technology of KRC is currently under-going intensive field trails and is capable of avoiding collision between trains. Sky bus metro is another

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innovative, economic and eco-friendly mass rapid transportation solution devised by KRC, which is undergoing trials at present, will help railways run the fastest train in the near future and will make tracks much more safe and sustainable.

NEW TECHNOLOGIES
India became the first developing country and the 5 th country in the world to roll out the first indigenously built "state-of-the-art" high horse power three-phase electric locomotive. When the first such loco was Hugged off from Chittranjan Locomotive Works (CLW) CLW has been achieving progressive indigenization and the cost of 'locomotives has come down to the level of Rs.13.65 cr. diesel locomotives works, Varanasi has produced state-of-the-art 4000HR AC/AC diesel locomotive in April 2003. These 'locos are capable of handling 4800 tone freight trains at a speed of 100 KMPII. and can continuously up to 90 days in one stretch without any major maintenance. Darjeeling Himalayan Railways attained the world heritage status from UNESCO. Fairy Queen, the oldest functioning steam engine in the world, which finds place in the Guinness Book of world records, got heritage award at the International Tourist Bureau, Berlin in March 2000. On operational front, Delhi Main Station entered the Guinness Book for haying the world's largest route relay interlocking system.

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ANNUAL PLAN 2008-09
The Annual plan of 2008-09 is the highest ever annual plan of the railways. It is proposed to invest Rs.37, 500 cr. Which is 21 percent more than the previous year? The total budgetary support to be received from general exchequer is Rs.7874 cr. including Rs.774 cr. to be provided from central road fund? In this manner internal and external budgetary resources would constitute 79 per cent of the annual -plan. The outlay for doubling works has been increased to Rs.2, 500 cr. traffic facility works-to Rs.1535 cr. projects under implementation has been proposed for

by RVNL. Provision for Rs.1730 cr. for new

lines, Rs.2489 cr. for gauge conversion, Rs.626 cr. for electrification & Rs.650 cr. for metropolitan transport projects has been made. On safety related plan heads, provision has been made for Rs.3600 cr. for track renewals. Rs.1,520 cr. for signal and telecommunication works, Rs.700 cr. for Road under, Bridges and Rs.600 cr. for manning of unmanned level crossings. Additional funds to the tune of Rs.1712 cr. have been sought for Ministry of Finance for national projects of Udaipur-Srinagar Baramulla, Jiribam-Imphal Road, Dimapur-Kohinia, Azra-Bymiliat and KUmarghat-Agartala new line, Bogibeel Rail-cum-Road Bridge and LUmding-SilchacJiribam, Rangia-Murkongeiek gauge conversion.

ONGOING PROJECTS
During the current year, 2003 km broad gauge lines are likely to be completed. The target for construction of broad gauge lines in "2008-09 is 3500 km. The construction of new lines between Kakaporc and Bedlam in Kashmir Valley has already been completed and the remaining portion in the valley will be completed in 2008-09

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NEW LINES
155 km of new line is likely to be completed in 2007-08. Bangalore-Hassan has already been completed, Manu-Ambassa of Kumarghat-Agartala, Mahab-Khajuraho, Bikramganj-Piro of Ara-Sasaram and Deogarh-Ghormara of Deogarh-Dumka are likely to be completed soon. A target of 350 km has been fixed for construction of new lines in 2008-09. Some prominent sections are as follows:

Ghormara-Kumka of Deogarh-Dumka Nagapattinam-Velenkanni Yerraguntla-Nossam of Yerraguntla-Nandyal Harapanhalli-Harihar

  

DOUBLING
During 2007-08, doubling of 500 km is expected to be completed while target of 1000 km has been fixed for the year 2008-09.

NEW PROJECTS
I am happy to inform the House that work of gauge conversation of RatlamIndore-Khandwa-Akola, Udaipur-Ahhedabad, Suratpura-Hanumangarh-Sriganganagar, JaipurRingus-Churu & Sikar-Loharu, Madurai-Bodinayakkanur and new lines Kursela-Bihariganj, Erode-Palani, Gaya-daltonganj, Chennai-puducheery-cuddalore,muzaffarpur-dardhanga,

Attipattu-puttur and jalalgarh-kishanganj have been included in the budget. The works of

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panskura-kharagpur, bina-bhopal, Champa-Jharsuguda,

Rajkharswan-sini third line,

the

state government of Maharashtra has agreed to share cost of manmad-indore and the proposals would be processed further for necessary approval.

SURVEYS
Based on demands, the foiling surveys are proposed to be taken up:
     

Washim-Badnera Solapur-Jalgon Rewari-Palwal-Khurja Meerut-Panipat Salna-kumtai Ellenabad-Sirsa

Khandwa-Dhar Rotegaon-Puntambu Baddi-Barotiwala-Nangal Kanjangad-Panathur Dongargarh-Kota Junagarh-Arnbaguda

GAUGE CONVERSION  

Billimora-Waghai with extension up to manmad Pratapnagar -Jambusar-Kavi Jhaghadia-Netrang-with extension up to Nandurbai Mavi -Badi Sadri New mal-Maynaguri Road


DOULDING
 

Aunrihar –Varanasi Lohto –Jhangai Buxar-Ara-Mokama third line Dornakal-Manuguru

 

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Omalur -Mcttur Dam

BUDGET ESTIMATES 2008-2009
The target for freight loading for the year 2008-09 has been kept, at 850 MT

and for freight output at 550 billion ton km. Budget Estimates for Freight, passenger, sundry other earnings and other coaching earning have been kept at Rs.52,700 cr. Rs.21,681 cr,Rs.5,000cr and Rs.2,420 cr. respectively. Maintaining an overall double digit growth, gross traffic earnings have been projected as Rs.81,801’cr, reflecting an increase of Rs.9,146-cr. on the current year The provision for ordinary working expenses for 2008-09 has been kept at Rs.50,000cr, which is 20 per cent more than the revised estimates for 2007-08. Provision for depreciation reserve fund has been stepped up to Ks.7,000 cr. and pension fund to Rs.9,590 cr. I have made an ad hoc provision of nearly Rs.5000 cr. for anticipated recommendations of the 6" pay commission. Thus the total working expenses will be Rs.66,590 cr. and net revenue Rs.16,423 cr. while railways cash surplus before dividend is projected at Rs.24,783 cr. the target

operating ratio is 81.4 percent. Dividend payable for 2007-08, is estimated at Rs.4,636 cr. In the plan outlay for the next year, Rs.20,600 cr. will be provided from internal sources.

PASSENGERS SERVICES
During the last four years railways had been reduced the fares of second class by one rupee per passenger for suburban services, two rupees. per passenger for second class non-suburban services, 20%, reduction in super-fast surcharge levied on second class super fast mail/express trains, up to 24% in the fares for the AC 1st class and up to 14% in the fares for AC 2-tier. We have done the magic of generating a surplus of 25,000 cr. despite

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reduction in fares. Bowing to the hopes of millions of people.

FREIGHT BUSINESS
In the earlier rating regime, freight rates for high value goods were higher than low value of goods. Now, freight rates are not based on the value of goods but are fixed after taking into account railways competitiveness and elasticity of demand. Under the new pricing strategy, surcharge is-levied during peak season and discounts offered during lean season. As per present policy, peak and non-peak season and discounts offered during lean seasons have been fixed uniformly for all the commodities. While many commodities have different peak and non-peak seasons, loading of some commodities remains the same throughout the year. Therefore in 2008-09, we have decided to modify this policy as per the prevailing market conditions. During the last four years, we have rationalized the freight structure' extensively to make it simple and transparent. Earlier, we had announced that barring some light commodities, the difference in the highest rates and reduced the freight rates for petrol and diesel by more than 12% during the last two years by reducing its classification from class-240 to class-210. Thus, the rationalization of freight tariff has now completed and barring few light commodities, the difference between the highest and the lowest rates is not more than two times.

NEW STEPS TOWARDS SAFETY AND SECURITY
Safety of 13 million passengers that Indian Railway serves every day is of paramount importance to the system. Over the years, apart from the regular safety norms followed, the network has taken a number of steps' through innovative use of

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technology and stepped up training to its manpower to enhance safety standards. A number of distressed bridges, old tracks, signaling system and other safety enhancement devices will be replaced during this period. As far as budget allocation for safety is concerned, Rsl400 cr. was allocated in the revised estimate for the year. 2001-02, and Rs2210 cr. for the year 2002-03. Extensive field trials of the Anti-collision Devise (ACD) indigenously developed by Konan Railway Is-going on and once developed across the zonal railways, this innovative technology will help railways reduce accidents due to collision between trains.

Security of railway passengers is at present a shared responsibility of the Railway Protection Force (RPF) and Govt. Reserve Police (GRP). Efforts are on to amend the Railway act to give more powers to the RPF in ensuring security of passengers on trains and within railway premises.

WORKING OF RAILWAYS
The existing enactment regulating the construction and operation of railways in India are the Indian train's ways of 1886 and the Indian railways act of l99O as amended from time to time. According to the provisions of these enactments, the executive authority in connection with the administration of railways vests- i n the central government..

ADMINISTRATION
The ministry of Railways is responsible for management and running of Railways. All the functions and powers of the central government under certain sections of the Indian railways act are however delegated to the railway board

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under section 2- of the Indian Railway Board Act of 1905. The Railway Board is to function as a corporate body and as a corporate is responsible to advice the minister on all major questions of Railway policy. The Railway board is the supreme authority for. day-to-day, administration of the railways and consists of a chairman, a financial commissioner and four members— member of staff, member of engineering, and member of mechanical and member of transportation. The secretary, ministry of transportation also a member of the board exofficio. The chairman of the railway board has the status of a principal secretary to the Govt. of India. For the administrative purpose, Indian govt. railways arc geographically divided into nine zones, each under a general manager who exercises supervisory control over all the departments and also co-ordinates their working.

IMPROVING FINANCIAL HEALTH
The financial position of Indian Railways has been slowly but steadily improving some of the highlights of the financial performance during'2001-02 include: improved operating ratio from 98.8% to 96.6%, savings in ordinary wording expenses of Rsl487 cr. Depreciable Reserve Fund (DRF) balance goes up from Rs78.04 cr. during March last year to Rs632.99 cr. during same time this year. Railways have established a new milestone in incremental freight loading during duly this year by carrying 5.70 million tones of goods. Freight loading for the last financial year crossed the target and attained 492.31 million tones.

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TIE-UP WITH FOREIGN RAILWAYS
Indian railways is in constant touch with Railways across the world to bring in state-of-art facilities in its system towards this, a memorandum of understanding was signed during the Eight Session of the Indo-Austria joint economic commission held in Vienna. This seeks to promote and deepen long-term infrastructure-specific cooperation between Indian and. Austrian railways to their mutual benefit. Indian Railways in New Delhi in which hundreds of delegates from various industries and Railways around the world participated organized a three-day International conference of Union of Railways.

SOCIAL OBLIGATIONS AND CARE FOR WEAKER SECTIONS
Senior citizens, Students, Disabled persons etc., enjoy concessional benefits from Railways. New initiatives in this Area during the last three years include reduction of age limits for special concession to senior women citizen from 65 to 60 years, blind and mentally challenged persons can now travel in AC classes on concessional rates. A free second-class monthly season ticket (MST’s) for school going children up to tenth standard for travel between homes to school was also introduced.

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MAP
A schematic map of the Indian Railway network. For administrative purposes, Indian Railways is divided into sixteen zones.

TABLE ZONES FOR INDIAN RAILWAYS
No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Name Northern Railway North Eastern Railway Northeast Frontier Railway Eastern Railway South Eastern Railway South Central Railway Southern Railway Central Railway Western Railway South Western Railway North Western Railway West Central Railway North Central Railway South East Central Railway East Coast Railway East Central Railway Konkan Railway Abbr. NR NER NFR ER SER SCR SR CR WR SWR NWR WCR NCR SECR ECOR ECR KR Head Quarters Delhi Gorakapur Milligan (Guwahati) Kolkata Kolkata Secunderabad Chennai Mumbai Mumbai Hubli Jaipur Jabalpur Allahabad Bilaspur, CG Bhavaneshwar Hajipur Navi Mumbai Date Established April 14; 1952 1952 1958 April, 1952 1955 October 2, 1966 April 14, 1951 November 5, 1951 November 5, 1951 April 1, 2003 October 1, 2002 April 1, 2003 April 1, 2003 April 1, 2003 April 1, 2003 October 1, 2002 January 26, 1998

Konkan Railway (KR) is constituted as a separately incorporated railway, with its headquarters at Belapur CBD (Navi Mumbai). It comes under the control of the Railway Ministry and the Railway Board. The Calcutta metro is owned and operated by Indian Railways, but is not a part of any of the zones. It is administratively considered to have the status of a zonal railway.

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Each zonal railway is made up of a certain number of divisions, each having a divisional head quarters. There are a total of sixty seven divisions.

TABLE DIVISIONS OF INDIAN RAILWAYS
ZONAL RAILWAY Northern Railway North Eastern Railway Northeast Frontier Railway Eastern Railway South Eastern Railway South Central Railway Southern Railway Central Railway Western Railway DIVISIONS Delhi, Ambala, Firozpur, Luck now, Moradabad Izzatnagar, Luck now, Varanasi Alipurduar, Katihar, Lumding, Rangia, Tinsukia Howrah, Sealdah, Asansol, Malda Agra, Chakradharpur, Kharagpur, Ranchi Secunderabad, Hyderabad, Guntakal, Guntur, Nanded, Vijayawada. Chennai, Madhurai, Palghat, Tiruchchirapalli,

Trivandru, Salem Mumbai, Bhusawal, Pune, Solapur, Nagpur Mumbai Central, Baroda, Ratlam, Ahmedabad, Rajkot, Bhavnagar Hubli, Bangalore, Mysore Jaipur, Ajmer, Bikaner, Jodhpur Jabalpur, Bhopal, Kota Allahabad, Agra, Jhansi Bilaspur, Raipur, Nagpur Khurda Road, Sambalpur, Visakhapatnam Danapur, Dhanbad, Mughalsarai, Samastipur, Sonpur

South Western Railway North Western Railway West Central Railway North Central Railway South East Central Railway East Coast Railway East Central Railway

Indian Railways operates 8,702 passenger trains and transports around five billion annually across twenty six states and three union territories (Delhi, Puducherry (Formerly Pondicherry) and Chandigarh). Sikkim and Meghalaya are only states not connected.

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The passenger division is the most preferred from of long distance transport in most of the country. A standard passenger train consists of eighteen coaches, but some popular trains can have up to 24 coaches. Coaches are designed to accommodate anywhere from 18 to 72 passengers, but may actually accommodate many more during the holiday seasons and on busy routes. The coaches in use are vestibules, but some of these may be dummied on some trains for operational reasons. Freight trains use a large variety of wagons. Each coach has different accommodation class; the most popular being the sleeper class, 'Up to nine of these type coaches are usually coupled. Air conditioned coaches are also attached, and a standard train may have between three and five air-conditioned coaches. Online passenger ticketing, introduced in 2004, is expected to top 100,000 per day by 2009, while ATMs in many stations will be equipped to dispense long-distance tickets by the end of 2007.

PRODUCTION SERVICES
The Indian Railways manufactures a lot of its Tolling stock and heavy engineering components. This is largely due lo historical reasons. As with most developing economies, the main reason is import substitution of expensive technology related products. This was relevant when the general state of the national engineering industry was immature. Production Units, the manufacturing plants of the Indian Railways, are managed directly by the ministry. The General Managers of the PUs report to the Railway Board. The Production Units are:

Diesel Locomotive Works, Varanasi

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Chittaranjan Locomotive Works, Chittaranjan Diesel-Loco Modernizations Works, patiala Integral Coach Factory, Chennai Rail Coach Factory, Kapurthala Wheel & Axle Plant, Bangalore

• • •

SUB-URBAN RAIL
Many cities have their own dedicated suburban networks to cater to commuters. Currently, suburban networks operate in Mumbai (Bombay), Chennai (Madras), Kolkata (Calcutta), Delhi, Hyderabad and Pune, Hyderabad, and Pune do not have dedicated suburban tracks but share the tracks with king distance trains. New Delhi, Chennai and Kolkata have their own metro networks, namely the New Delhi Metro, the Chennai MRTS-Mass Rapid Transport System, same as other local EMU suburban service as in Mumbai and Kolkata etc., but with dedicated tracks mostly laid on a flyover and the Kolkata Metro, respectively Suburban trains that handle commuter traffic are mostly electric multiple units. They usually have nine coaches or sometimes twelve to handle rush hour traffic (Chennai MRTS has three or six coach formation,-Hyderabad MMTS; abbreviation for Multi Modal Transport System has mostly six coach train with a single nine coach one). One unit of an EMU train consists of one power car and two general coaches. Thus a nine coach EMU is made up of three units having one power car at each end and one at the middle. The rakes in Mumbai run on direct current, while those elsewhere use alternating current. A standard coach-is designed to accommodate 96 seated passengers, but

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the actual number of passengers can easily double or triple with standees during rush hour. The Kolkata metro has the administrative status of a zonal railway, though it does not come under the seventeen railway zones. The Suburban trains in Mumbai handle more rush then any other suburban network in India. The network has three lines via, western, central and harbor. It's considered to be the lifeline on Mumbai. On 11 July 2006 six bombs were set off on these trains, targeted at the general public

Freight
IR carries a huge variety of goods ranging from mineral ores, fertilizers and petrochemicals, agricultural produce, iron & steel, multimodal traffic, and others. Ports and major urban areas have their own dedicated freight lines and yards. Many important freight stops have dedicated platforms and independent lines. Indian Railways makes 70% of its revenues and most of its profits from the freight sector, and uses these profits to cross-subsidies the loss-making passenger sector. However, competition from trucks which offer cheaper rates has seen a decrease in freight traffic in recent years. Since the 1990s, Indian Railways has switched from small consignments to larger container movement which has helped speed up its operations. Most of its freight earnings come from such rakes carrying bulk goods such as coal, cement, food grains and iron ore. Indian Railways also transports vehicles over long distances. Trucks that carry

25

goods to a particular location are hauled back by trains saving the fresh food and vegetables. Recently Indian Railways introduced the special 'Container Rajdhani' or CONRAJ, for high priority freight. The highest speed notched up for a freight train is 100 km/h (62 mph) for a 4,700 metric ton load. Recent changes have sought to boost the earnings from freight. A privatization scheme was introduced recently to improve the performance of freight trains. Companies are being allowed to run their own container trains. The first length of an 11,000km freight corridor linking India's biggest cities has recently been approved. The railways have increased load, limits for the system's 220,000 freight wagons by 11%, legalizing something that was already happening. Due to increase in manufacturing transport in India that was augmented by the increase in fuel cost, transportation by rail became advantageous financially. New measures such as speeding-up the turnaround times have added some 24% to freight revenues.

NOTABLE TRAINS AND ACHIEVEMENTS
The Darjeeling Himalayan Railway is a World Heritage Site, and one of the few steam engines in operation in India. The Darjeeling Himalayan Railway, a narrow gauge train with a steam locomotive is classified as a World Heritage Site by UNESCO. The-route started earlier at Siliguri and now at New Jalpaiguri in the plains in West Benga] and traverses tea gardens en route to Darjeeling, a hill station at an elevation of 2,134 meters (7,000 ft). The highest station in this route is Ghum. The Nilgiri Mountain Railway, in the Nilgiri Hills in southern India, is also classified as a World Heritage Site by UNESCO.£4] It is also the only rack railway in India. The Chatrapati Shivaji Terminus (formerly Victoria Terminus) railway station

26

in Mumbai is another World Heritage Site operated by Indian Railways. The Palace on Wheels is a specially designed train, lugged by a steam engine, for promoting tourism in Rajasthan. The Maharashtra government did try and introduce the Deccan Odyssey along the Konkan route, but it did not enjoy the same success as the Palace on Wheels. The Samjhauta Express was a train that ran between India and Pakistan. However, hostilities between the two nations in 2001 saw the line being closed. It was reopened when the hostilities subsided in 2004. Another train connecting Khokhrapar (Pakistan) and Munabao (India) is the Thar Express that restarted operations on February 18, 2006; it was closed down after the 1965 Indo-Pak war. The Kalka Shimla Railway till recently featured in the Guinness Book of World Records for offering the steepest rise in altitude in the space of 96 kilometers.

The Lifeline Express is a special train popularly known as' the "Hospital-onWheels" which provides healthcare to the rural areas. This train has a compartment that serves as an operating room, a second one which serves as a storeroom and an additional two that serve as a patient ward. The train travels around the country, staying at a location for about two months before moving elsewhere. Among the famous locomotives, the Fairy Queen is the oldest running locomotive in the world today, though the distinction of the oldest surviving locomotive belongs to John Bull. Kharagpur railway station also has. the, distinction ol' being the world's longest railway platform at 1Q72 in (3,517 ft). The Ghum station along the Darjeeling Toy Train route is the second highest railway station in the world to be reached by a steam loco motive.[6] Indian Railways operates 7,566 locomotives; 37,840 Coaching vehicles and 222,147 freight wagons. There are a total of 6,853 stations; 300 yards; 2,300

27

goods-sheds; 700 repair shops and a total workforce of 1.54 million.(7]

ORGANISATIONAL STRUCTURE
Indian Railways is owned and controlled by the Government of India, via the Ministry of Railways, but it is not a company. It is a department of the Govt. of India. The Railway Ministry is currently headed by Mamata Benerji, the Union Minister for Railways and assisted by two junior Ministers of State for Railways, K.H. Muniyappa and E. Ahamed, chairman Railway Board, S.M. Sharma, Indian Railways is administered by the Railway Board, which has six members and a chairman. Each of the sixteen zones is headed by a General Manager (GM) who reports directly to the Railway Board. The zones are further divided into divisions under the control of Divisional Railway Managers (DRM). The divisional officers of engineering, mechanical, electrical, signal & telecommunication, accounts, personnel, operating, commercial and safety branches report to the respective Divisional Manager and are lit charge of operation and maintenance of assets. Further down the hierarchy tree are the Station Masters who control individual stations and the train movement through the track territory under their stations' administration. In addition to the zones, the six production units (PUs) are each headed by a General Manager (GM), who also reports directly to the Railway Board. In addition to this the Central Organization for Railway Electrification-(CORE), Metro Railway, Calcutta and construction organization of N F Railway are also headed by a GM. CORE is located at Allahabad. This organization undertakes electrification projects of Indian Railway and monitors the progress of various electrification projects all over the country. Apart from these zones and production units, a number of Public Sector. Undertakings (PSU) are under the administrative control of the

28

ministry of railways. These PSU's are:

Dedicated Freight Corridor Corporation of India Indian Railways Catering and Tourism Corporation Konkan Railway Corporation Indian Railway Finance Corporation Mumbai Rail Vikas Corporation Railtel Corporation of India - Telecommunication Networks RITES Ltd. - Consulting Division of Indian Railways IRCON International Ltd. - Construction Division Rail Vikas Nigam Limited Container Corporation Limited Centre for Railway Information Systems is an autonomous society under Railway Board, which is responsible for developing the major software required by Indian Railways for its operations.

      


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HISTORY OF RAILWAYS
16th April, 1853………….. The Beginning The first railway on Indian sub-continent ran over a stretch of 21 miles from Bombay to Thane. The idea of a railway to connect Bombay with Thane, Kalyan and with the Thal and Bhore Ghats inclines first occurred to Mr. George Clark, the chief engineer of the Bombay Government, during a visit to Bhandup in 1843. The formal inauguration ceremony was performed on 16th April 1853; When 14 railway carriage carrying about 400 guests left Bori Bunder at 3:30 pm “amidst the loud applause of a vast multitude and to the salute of 21 guns”. The first passenger train steamed out of Howrah station destined for Hoogly a distance of 24 miles, on 15th August, opened to public traffic, inaugurating the beginning of railway transport on the Eastern side of the sub-continent. In south the first line was opened on 1st July, 1856 by the Madras Railway company. It ran between veyasarpandy and Walajah road (Arcot), a distance of 63 miles. In the north a length of 119 miles of line was laid from Allahabad to Kanpur on 3rd march 1959. The first section from Hathras Road to Mathura Cantonment was opened to traffic on 19th October, 1875. These were the small beginnings which is due course developed into a network of railway lines all over the country. By 1880 the Indian Railway system had a route mileage of about 900

30

COMPANY PROFILE
INDIAN RAILWAYS, the premier transport organization of the country is the largest rail network in Asia and the world’s second largest under one management INDIAN RAILWAYS RUNS AROUND 11,000 TRAINS EVERYDAY, OF WHICH 7,000 ARE PASSENGER TRAINS Indian Railways is a multi-gauge, multi-traction system covering the following: TRACK KILOMETERS Broad Gauge (1676mm) Meter Gauge (1000mm) Narrow Gauge (762/610mm) Total ---86,526 18,529 3,651 108,706

Locomotive Coaching Vehicles Freight Wagongs Stations Yards Good sheds Repairs shops Workforce

---------

7,566 37,840 222,147 6,853 300 2300 700 1.54 Millions

Indian Railway is one of the biggest Rail road system in the World operated and maintained under single management. It is both a Government department as well as a commercial undertaking expected to be run on commercial lines. As a Government department, Indian Railway is expected to meet the social obligations by carrying the traffic at subsidized rates and at the same time Indian Railway is expected to achieve

31

profitability to meet its revenue as well as capital requirements for its operations maintenance & expansion needs. The Network of Indian Railway is spread over 63000 routes Km spread into about 7000 stations having a staff formation of 14lakh employees. Indian Railway carries an estimated passenger Traffic of 5700 millions of passengers in the year 2005-06. It carries a wide range of commodities over the system to cater to need of industry, thus helping the economic development of the country. Indian Railway is expected to carry during 2007-08 785 million tons freight Traffic bringing about earnings of Rs.47000 corers and the overall Gross earnings from passengers, other coaching goods earnings are targeted to touch Rs.71000 corers in the year 2007-08 The financial viability of Indian Railway is judged by its operating Ratio-a ratio of total working expenses divided by gross earnings and expressed as percentage. The operating ratio of Indian Railway during 2007-08 (audited figures) stood at 83.2% & for 2008&09 the operating ratio is budgeted or targeted at 79.6%.

TURNAROUND OF INDIAN RAILWAY
Indian Railways during last 5years had adopted new financial and marketing strategies its main emphasis was increased volumes, cutting the costs and improve the financial performance by better utilization of existing resources & assets. The significant feature appreciated Economies, trade & General public was that Indian Railway did not increase the fares & freights over couple of years but improved it financial performance by ending up in surplus of Rs.20 thousand corers during the year 2008-2009. Some of the methods adopted below are as under :  Carry more loads in the existing wagons

32

Adopt different marketing strategies by inviting public and private partnership, joint venture etc.

By adopting e-ticketing, leasing of space in private to private parties Outsourcing of activities like maintenance of stations, catering services that helped in reduced manpower cost and increase earnings.

  

Leasing of vacant land for commercial purpose. Inviting industry to provide wagons at their cost. Increase in capacity by successive replacement of first class coaches into AC II tier and AC III tier.

Introduction of Intercity express Trains and adding more coaches to existing trains.

NATIONAL RAIL VIKAS YOJANA
With a view to complete strategically important Projects within a stipulated period of time, a non-budgetary investment initiative for the development of Railways has been launched. Under the scheme all the capacity bottlenecks in the critical sections of the railway network will be removed at an investment of Rs.15, 000 crores over the next five years. These projects would include:

33

Strengthening of the golden Quadrilateral to run more long-distance mail/express and freight trains at a higher speed of 100 kmph. Strengthening of rail connectivity to ports and development of multi-modal corridors to hinterland.

Construction of four mega bridges – two over River Ganga, one over River Brahmaputra, and one over River Kosi.

Accelerated completion of those projects nearing completion and other important projects. History of Vijayawada Division

It was created on 2 October 1966 as the ninth zone of Indian Railways. The six divisions of this railway have a total 5,752 route kilometers of track. Current General Manager of S.C. Railway is Mr. M. S. Jayant, an officer of IRTS. From the days of steam-hauled locomotives and wooden plank seats, South Central Railway has come a long way,

34

modernizing its system with the state of the art high-powered Diesel and Electric Locomotives, high speed telescopic Passenger Coaches, and higher axle load wagons, higher capacity track in all important routes, LED based multiple aspect color light signaling with panel interlocking & solid state interlocking, and digital microwave and optic fiber cable communication system, ISDN exchanges etc. Over the years, South Central Railway has attained sufficient transportation output with adequate infrastructure development and technological upgrading to serve the regions in its jurisdiction. Safe operation of trains, expansion of network, modern passenger amenities, punctuality of trains, courteous service and cleanliness in stations and trains remain always the thrust areas of this Railway. Being a service oriented organization, South Central Railway provided Computerized Passenger Reservation System at 85 Stations/locations covering 96% of the berths available. In the arena of information dissemination to the rail customers, it has provided "139" Interactive Voice Response System (IVRS) for Reservation and train enquiry, National Train Enquiry System (NTES) for real-time information on movement of trains, Passenger Operated Enquiry Terminals (POET) with information on availability of accommodation and confirmation and Close Circuit Television (CCTV) for real time reservation availability status at all important stations in its system.

The Guntur Junction of Guntur Division

35

For mass movement of freight, S.C. Railway has introduced high horse powered Diesel and Electric Locomotives and high speed, higher Axle load Box-N-Wagons. Today, South Central Railway plays a pivotal role as a catalyst for agricultural and industrial development in the Southern peninsula apart from fostering the growth of trade and commerce including import/export through ports by connecting sea ports with their hinder land and inland container depots. Its reliable and comfortable passenger services for long and short distance travel by introducing many super fast and inter city trains helps transform the society by catering to their personal, business, educational and tourism purposes. South Central Railway was formed on 2 October, 1966, by grouping the Vijayawada and Hubli Divisions of Southern Railway and Secunderabad and Solapur Division of Central Railway. Jurisdictional adjustments were made in October, 1977, by merging Guntakal Division of the Southern Railway with South Central Railway and transferring Solapur Division back to Central Railway. Secunderabad Division was split in February, 1978 into two Divisions Secunderabad and Hyderabad to facilitate effective operational and administrative control. On 1 April, 2003, the newly formed Guntur division and Nanded Division of South Central Railway became operational and Hubli Division was transferred to the newly formed South Western Railway. Presently, the South Central Railway has six divisions, namely Secunderabad, Hyderabad, Vijayawada, Guntur, Guntakal and Nanded with 5752 Route km of which 1604 Route km are electrified. Vijayawada is the largest railway junction in South India and the most important station of the South Central Railway.

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BUDGETARY CONTROL

INTRODUCTION
Planning has become the primary function of management these days. Most of the" planning relates to individual situations and individual proposals. However, this has to

37

be supplemented and reinforced by over all periodic planning followed by continuous comparison with the actual performance with the planned performance. Budgets are nothing but expressions, largely in financial terms, of, management's plans for operating and managing the enterprise during specific periods of time. Budgetary control has, therefore, become an essential tool of management for controlling costs maximizing profits.

MEANING & DEFINITION OF BUDGET & BUDGETARY CONTROL
What is Budget? A statement of estimated annual receipt and expenditure whether, on capital or revenue account of central government is prepared by the railway board. In other words it can be said that under (article 112) of constitution of India, the president will call upon a statement from Railways showing the estimated income and the out-lay amount that has to cross the Consolidated Fund of India. These statements are known as 'Budget'.

MEANING OF A BUDGET
A budget is a detailed plan of operations of some specific future period. It is an estimate prepared in advance of the period to which it' applies. It acts as a business barometer as it is a complete programmer of activities of the business for the period covered. According to Gordon and Shilling law budget may be defined as "a predetermined detailed plan of action developed and distributed as-a guide to current operations and as a partial basis for subsequent evaluation of performance." The Chartered Institute of Management Accountants, London, defines a budget as "a

38

financial and/ or quantitative statement, prepared prior for a defined period of time, of the policy to pursued during that period for the purpose of attaining a given objective."

NATURE OF BUDGETARY CONTROL
Budgetary control is the process of determining various budgeted figures for the enterprise for the future period and then comparing the budgeted figures with the actual performance for calculating variances, if any. First of all budgets are prepared and then actual results are recorded. The comparison of budgeted and actual figures will enable the management to find out description and take remedial measures at a proper time. The budgetary control is a continuous process, which helps in planning and co ordination. It provides a method of control too. The Chartered Institute of Management. Accountants, London, defines budgetary control as 'the establishment of budgets relating to the responsibilities of executives to the requirements of a policy, and the continuous comparison of actual and budgeted result, either to secure individual action the objective of that policy or to provide a basis for its revision." According to J.A. Scott, "it is the system of management control and accounting in which all operations are forecasted and so far as possible planned ahead, and the actual results compared with forecasted and planned ones." BUDGET, BUDGETING AND BUDGETARY CONTROL A budget is a blue print of a plan expressed in quantitative--terms. Budgeting is a technique for formulating budgets. Budgetary control, on the other hand, refers to the principles, procedures and practices of achieving given objectives through budgets. According to Rowland and William have differentiated the three terms as;

39

"Budget are the individual objectives of a department, etc., where as Budgeting may be said to be the act of building budgets.' Budgetary control embraces all and in addition includes the science of planning the budgets to affect an overall management tool for the business planning and control."

DIFFERENCE BETWEEN BUDGET & BUDGETTARY CONTROL
1. The budget is an act of planning whereas budgetary control is an act of controlling. 2. The budget concerns itself with the future. Budgetary control is

however concerned with the present activities although it is prepared on the basis of data collected from the past budget. But the activities that the budgetary control involves are not limited to that budget only. It is also related to the questions as to how far the budget can effectively utilized in future. 3. The budget fixes the target and budgetary control helps to arrive at that target. 4. The budget fixes the target and budgetary control to determine the variation between the budget and the actual performance and analyse the reasons for the variations. They are extremely useful at the time of preparing a revised budget. 5. The actual performance is measured -not by the budget but by the budgetary control.

OBJECTIVES OF BUDGETARY CONTROL
Budgetary control is essential for policy planning and control. It also acts as an instrument of co-ordination. The main objectives of budgetary control are as follows:

To ensure planning for future by setting up various budgets. The requirements and

40

expected performance of the enterprise are anticipated.
 

To co-ordinate the activities at different departments. To operate various cost centers and departments with efficiency and economy. Elimination of wastes and increase in profitability. To anticipate capital expenditures for future. To centralize the control system. Correction of deviations from the established standards. Fixation of responsibility of various individuals in the organization.

    

CHARACTERISTICS OF BUDGETING

A good budgeting system should involve persons at different levels while preparing the budgets. The subordinates should not feel any imposition of them.

There should be a proper fixation of authority and responsibility. The delegation of authority should be done in a proper way.

The targets of the budgets should be realistic; if the targets are difficult to be achieved then they will not ensure' the persons concerned.

 

A good system of accounting is also essential to move the budgetary successful. The budgeting system should have a whole-hearted support of the top management.

The employees should be imparted budgeting education. There should be meetings and discussions and the targets should be explained to the employees concerned.

A proper reporting system should be introduced; the actual result should be promptly reported so that performance appraisal is undertaken.

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CLASSIFICATION AND TYPES OF BUDGETS
The budgets are usually classified according to their nature. The following are the types of budgets, which are commonly used. a) Classification According to Time: 1. 2. 3. b) Long-term Budgets Short-term Budgets Current Budget

Classification of the Basis of Function: 1. 2. 3. Operating Budgets Financial Budgets Master Budgets

c)

Classification on the basis of Flexibility: 1. 2. Fixed Budget Flexible Budget

CLASSIFICATION ACCORDING TO TIME
1. Long Term Budgets The Budgets are prepared to depict long term planning of the business. The period of long term budgets various between five to ten years. The long term planning is done by the top'-level management and generally it is not known to lower levels of management. Long-term budgets are prepared for some sectors of the concern such as capital expenditure, research and development, long-term finances etc. These budgets are useful for those industries where gestation period is long i.e.,-machinery, electricity, and

42

organization. 2. Short term Budgets These budgets are generally for one or two years and are in the form of monetary terms. The consumer's goods industries-like sugar, cotton, textiles, etc., use short-term budget. 3. Current Budget The period of current budget is generally of months and weeks. The budgets relate to the current activities of the business. According to I.C.W.A. London. "Current budget is a budget which is established for use over a short period of time and is related to current conditions".

CLASSIFICATION ON THE BASIS OF FUNCTION
Budgets can be classified on the basis of functions they are meant to perform. Their number depends upon the size and nature of the business. The following are the usual functional budgets: 1. Sales Budget The budget forecasts total sales in terms of quantity, value, items, periods, areas etc.

2.

Production Budget The budget is based on sales budget. It forecasts quantity of production in terms of

items, periods, areas, etc. 3. Cost of Production Budget The budget forecasts the cost of production. Separate budgets are prepared

43

for different elements of cost such as direct materials budget, direct labor budget, factory overheads budget, office over heads budgets, selling and distribution overheads budget, etc 4. Purchase Budget The budget forecasts the quantity and value of purchases required for production. It gives quantity-wise, money-wise and period-wise information about the materials to be purchased. 5. Personnel Budget The budget anticipates the quantity of personnel required during a period for production activity. This may be further split up between direct and indirect personnel budgets. 6. Research Budget The budget relates to the research work to be done for improvement in quantity of the products or research for new products. 7. Capital Expenditure Budget The budget provides a' guidance regarding the amount of capital that may be required for procurement of capital assets during the budget period, 8. Cash Budget The budget is a forecast of cash position by time period for a specific duration of time. It states the estimated amount of cash receipts and cash payments, etc. 9. Master Budget It is a summary budget incorporating all functional budgets in capsule form. It interprets different functional budgets and covers within its range the preparation of projected income statement and balance sheet.

44

I.

OPERATING BUDGET
The budget shows planned operations for the forthcoming period, including

revenues, expenses and related changes in inventory. It covers in its ambit Sales Budget, Production Budget, Cost of Production Budget, etc. Thus, it is the principal part of Master Budget of the business. The operating budget usually consists of i) ii) Programmed budget and Responsibility budget

A.

PROGRAMMED BUDGET
It consists of expected revenues and costs of various products or projects that are

termed as the major programmers of the firm. Such a budget can be prepared for each product time or project showing revenues, Costs and the relative profitability of the various programmers. Programmer budgets*are thus useful in locating areas where efforts may be required to reduce costs and increase revenues. They are also useful in determining imbalances and inadequacies in programmers so that corrective action may be taken in future.

B.

RESPONSIBILITY BUDGET
It is a budget, which identifies the revenues and costs, with an individual

responsible for their incurrence. Such a budget is an excellent control device since it identifies with the individual only such revenues and costs which are controllable by him. The regarding the actual results are collected from different operations and compared with the budgeted figure to find out whether the individual has what he expected.

45

CLASSIFICATION OF THE BASIS OF FLEXIBILITY
The fixed budgets are prepared for a given level of activity, the budget is prepared before the beginning of the financial year, if the financial year starts in January then the budget will be prepared a month or two earlier i.e. November or December. The charge in expenditure arising out of the anticipated charges will not be adjusted in the budget. There, is a difference of about twelve months in the budgeted and actual figures. According to I.C.W.A. London, "Fixed budget is designed to remain unchanged irrespective of the level of activity actually attained". Fixed budgets are suitable under static conditions. If sales, expenses and costs can be forecasted with greater accuracy then this budget can be advantageously used.

FLEXIBLE BUDGET
A flexible budget consists of a series of budgets for different level of activity. It therefore, various with the level of activity attained. A flexible budget is prepared after taking into consideration unforeseen charges in the conditions of the Business. A flexible budget is defined as a budget, which by recognizing the difference between fixed, semi fixed and variable cost is designed to change in relation to the level of activi

RECENT DEVELOPMENT IN BUDGETING

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Zero-Based Budgeting Zero-base Budgeting is a view technique designed to revitalize budgeting. This technique was first used by the U.S. Department of Agriculture in 1961. Texas Instruments, a multinational company, pioneered is use in the private sector. It was Peter A. Pyhrr who designed its logical framework in 197O.The technique suggests that an organization should not only make decision about the proposed new programmers but it should also, from time to time, review the appropriateness of the existing programmers. Such review should particularly be done of such responsibility centers where there is relatively high proportion of discretionary costs.

Performance Budgeting Performance budgeting involves evaluation of the performance of the organization in the context of both specific as well as overall objectives of the organization. According to the National Institute of Bank Management, performance budgeting technique is, "the process of analyzing, identifying, simplifying and crystallizing specific performance objectives of a job to be achieved over a period in the framework of organizational objectives, the purpose and objectives of the job. The technique is characterized by its specific direction towards the business objectives of the organization."

REQUISITION FOR A SUCCESSFUL BUDGETARY CONTROL SYSTEM
1. Clarifying Objective The budgets are used to realize objectives of the business. The objectives must be

47

clearly spelt out so that budgets, are properly, prepared. In the absence of clear goals, the budgets will also be unrealistic.

2. Proper Delegation of Authority and Responsibility Budget preparation and control is done at every level of management. Even though budgets are finalized at top level but involvement of persons from lower, levels of management are essential for their success. This necessitates proper delegation of authority and responsibility.

3. Proper Communication System An effective system of communication is required for a successful' budgetary control. The flow of information regarding budgets should be quick so that these are implemented. The upward communication w i l l help in knowing the difficulties in implementation of budgets.

4.

Budget Education The employees should be properly educated about the benefits at budgetary system.

They should be educated about their "role in the success of this system. The employees may not take budgetary control only as a control device but it should be used as a tool to improve their efficiency.

5. Participation of all Employees Budgeting is done by every segment of the business. It will also require the active participation" and involvement of all employees. In practice the budgets are to be

48

executed at lower levels of management. Those for whom the budgets are framed should be actively associated with their preparation and execution. The employees, on the basis of their past experience, may give more practical and useful suggestions.

6. Flexibility Flexibility in budgets is required to make them suitable under changed circumstances - Budgets are prepared for the future, which is always uncertain. Even though budgets are prepared by considering the future possibilities but still some occurrences on may necessitate more appropriate and realistic.

7.

Motivation Budgets are to be implemented by human beings. Their successful implementation

will depend upon the interest shown to improve their working so that budgeting is successful.

ADVANTAGES OF BUDGETARY CONTROL
The budgetary control system helps in fixing the goals for the organization as whole as concerned efforts are made for its achievements. It enables economies in the enterprises. Some of the advantages of budgetary' are as follows.

Maximization of Profit The budgetary control aims at the maximization of profits of the enterprise. To achieve this aim, a proper planning and co-ordination of different functions are

49

undertaken. There is a proper control over various capital and revenue expenditure. The resources are put to the best possible use.

Co-ordination The working of different departments and sections is properly coordinated. The budget at different departments has a bearing on one another. The co-ordination of various executives and subordinated is necessary for achieving budgeted targets.

Tool for Measuring Performance By providing targets to various departments budgetary control provides a tool for measuring managerial performance. The budgeted targets are compared to actual results and deviations are determined. The performance of each department is reported to the top management.

Economy The planning expenditure will* be systematic and there will be economy is spending. The finance will fee put to optimum use. The benefits desired for the concern will ultimately extend to industry and then to national economy.

Corrective Action The management will be able to take corrective measures whenever there is discrepancy in performance. The deviations will be regularly reported so that necessary action is taken at the earliest.

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Cost Reduction In the present competitive world budgetary control has a significant role to play. Every business tries to reduce the cost a production for increasing sales.

LIMITATIONS OF BUDGETARY CONTROL
The budgetary control system is not a perfect tool. limitations, which are as follows: It has its own

i.

Opposition against the very spirit of budgeting There will be always active and passive resistance to budgetary control as it

points efficiency or inefficiency of individuals. The opposition is due to human nature- the tendency to resist change.

ii.

Budgeting and changing economy The preparation of a budget, which gives a realistic position of the firm's affairs

under inflationary pressure and changing government, is very difficult. Thus, the accurate position of the business cannot estimate.

iii.

Time factor Accuracy in budgeting comes through experience. Management must not expect too

much expect too much during the development period.

iv.

Not a substitute for management

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Budget is only a management tool. It cannot substitute management. Besides that no budgetary programmer can be successful unless adequate arrangements are made for supervision and administration. v. Co-operation required The success of the budgetary control depends upon willing cooperation and teamwork. Budget officer must have co-operation from all department managers. These managers must feel the responsibility for achieving departmental goals laid down in the budget.

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BUDGETORY CONTROL IN INDIAN RAILWAYS
INTRODUCTION
Under article 226 of the Constitution of India, a Consolidated Fund is defined as reservoir to which all the government earnings flow (credited) and from which the expenditure of government when so authorized by the parliament is made (debited). Central government is having consolidated fund of India.

Authorized Expenditure (Appropriation Bills) Under the article 114(1) of Indian constitution, after the budget is voted by the parliament and appropriations sanctioned by the president, an appropriation bill is passed. It becomes appropriation act and this act authorizes government to withdraw money from consolidated fund of India-to the extent sanctioned for incurring expenditure. It should borne in mind that though the expenditure is voted by the parliament and the appropriation sanctioned by the president.

EXPENDITURE
The expenditure is divided into two classes viz. voted and charged. Voted expenditure is that for which the provision of funds is subject to the Vote of Parliament. Charged expenditure is such class of expenditure for which the president accords sanction. Two types of control, namely budgetary and financial. Budgetary control is defined by the Institute of Cost and Management Accountants (C1MA) as: "The establishment of budgets relating the responsibilities of executives to the requirements of a policy, and the continuous comparison of actual with budgeted results,

53

either to secure by individual action .the objective of that policy, or to provide a basis for its revision".

RAIL BUDGET AND FINANCE
The Railway Budget deals with the induction and improvement of existing trains and routes, the modernization and most importantly the* tariff for freight and passenger travel. The Parliament discusses the policies and allocations proposed in the budget. The budget needs to be passed by a simple majority in the LokSabha (India's Lower House). The comments of the Rajya Sabha (Upper House) are not binding, Indian Hail ways are subject to the same audit control as other government revenue and expenditures. Based on the anticipated traffic and the projected tariff, the level of resources required for railway's capital and revenue expenditure is worked out. While the revenue expenditure is met entirely by railways itself, .the shortfall in the capital (plan) expenditure is met partly from borrowings (raised by Indian Railway Finance Corporation) and the rest from budgetary support from the Central Government. Indian Railways pays dividend to the Central Government for the capital, invested by the Central Government. As per the Separation Convention (on the recommendations of the Acworth Committee), 1924, the Railway Budget is presented to the Parliament by the Union Railway Minister, two days prior to the General Budget, usually around 26 February. Though the Railway Budget is separately presented to the Parliament, the figures relating to the receipt and expenditure of the Railways arc also shown in the General Budget, since they are a part and parcel of the total receipts and expenditure of the Government of India. This document serves as a balance sheet of operations of the Railways during the previous year and lists out plans for expansion for the current year.

54

The formation of policy and overall control of the railways is vested in Railway Board comprising the Chairman, Financial Commissioner and other functional Members for Traffic, Engineering, Mechanical, Electrical and Staff matters. As per the 2007 budget, Indian Railways earned Rs,54,600 cr. (Rs.546,000 million or US$12,300 million). Freight earnings increased by 10% from Rs.30,450 cr. (US$7,000 million) in the previous year. Passenger earnings, other coaching earnings and sundry other earnings increased by 7%, 19% and 56% respectively over previous year. Its year end fund balance is expected to stand at Rs.11,280 cr. (2.54 billion US$).[9] Around 20% of the passenger revenue is earned from the upper class segments of the passenger segment (the air-conditioned classes). The overall passenger traffic grew 7.5% in the previous year. In*the first two months of India's fiscal year 2006-07 (April and May), the Railways registered a 10% growth in passenger traffic, and a 12% in passenger earnings. The Budgets Estimates are prepared by Railways Administration for the following, and the figures are shown in thousands of rupees:A) B)
C)

Earnings Estimates (Receipts) Revenue Budget (demand Nos. 3 to 14) (C) Capital Budget (demand No. 16); (i) (ii) (iii) (iv) Works programmer Rolling Stock programmed Stores Transactions (demand 16, cap. 7100) Workshop Manufacturing Suspense

(D)

Civil Grants.

55

EARNINGS ESTIMATES
The Estimates for gross receipt should be prepared in thousands of rupees. The chief Marketing Mangers are responsible for preparation of earnings estimates as they are being in more touch with trade through marketing and sales organizations and" responsible for regulating the rates and fares. The accounts department will furnish all the details that are required by the commercial branch such as actual earnings subsidiary, details of Coal, General Goods, Military earnings etc. The Revised estimates of earnings for the current year and budget Estimates of next year are submitted at the same time to Railway. Board, consisting of the following break up of Traffic Earnings under the following heads:   

Passenger Other Coaching Goods. Sundries Suspense (Traffic Accounts). I. a) Traffic Earnings Coaching (i) Passengers Air conditioned First Class Second Class Total Passenger

56

(b)

Goods Coal Other than Coal Total Traffic earnings

II.

Sundry other earnings Total Gross Earnings

III.

Suspense Gross receipts: It includes Passengers, other coaching’s, goods, sundries

suspense-Traffic Account.

Revenue Budget (Demand Nos. 3 to 14) The Railways Administration viz. spending authorities are required to submit to railways board, their revised estimate for the current year and the budget estimate for the next year at the same time in the month of November each year for working expenses, Demand Nos. 3 to 13 and the figures are shown in thousands of rupees.

Works programmer Spending authorities' viz. C.E. open line and G.M. are responsible for the preparation of works budgets estimates in respect of the works chargeable to capital, DRF, DF, DLWR, and ACF, under Demand No. 16.

Preliminary Works Programmer The preliminary works programmer is initiated at Divisional/District level

57

in the month of June/July in respect of each work under each plan head and the works are grouped in two categories, namely, works costing more than Rs.5 lakhs each and works costing up to Rs.5 lakhs each. The items in the works programmer are grouped under the following categories: 1. New Works 2.Work-in-Progress

Final Works Programmer The Railways Board will then present theses estimates' for the railways, as a whole before the parliament. After the vote of parliament is obtained, the allotments are made through budget orders" to the various Zonal Railways by the Railways Board.

Rolling Stock Programmer Like, 'Works programmer', 'Rolling Stock Programmer* is prepared annually at two stages viz. (i) Preliminary Programmer, and (ii) Final Programmer under Demand No. 16—Assets, Acquisition, construction and replacement. The preliminary programmer is

submitted to the railways board by 15 January each year. Rolling Stock Programmer for the year is prepared 15 to 18 months before its commencement, it has necessarily to be based on the rough estimates of the traffic requirements of a later period and on the condition of rolling stock. Annual Rolling Stock programmer is a follow up of Five Years Plan formulated for Indian Railways.

PRESENTATION OF RAILWAY BUDGET
RAILWAY BUDGETING PROCEDURE The Budget is presented to Lok Sabha in two parts, namely, the Railway

58

Budget pertaining to Railway Finance and the General 4 Budget which gives an overall picture of the financial position of the Government of India, excluding the Railways. The Fiscal Responsibility and Budget Management Act, 2003 and the Fiscal Responsibility and Budget Management Rules, 2004 made under Section 8 of the Act have come into force on 5th July, 2004. Under Rule 4, Central government is required to lay, in the form prescribed under the said Rule, before both the Houses of Parliament the following Statements along with the Annual Financial Statement and Demands for Grants: 
 

Medium Term Fiscal Policy Statement Fiscal Policy Strategy Statement Macro-Economic Framework Statement The Finance Minister accordingly laid these statements on the Table of Lok Sabha in compliance with the above statutory requirement for the first time on 6 July, 2004.

The Budget is presented to Lok Sabha on such day as the President may direct. Simultaneously, a copy of the respective Budgets is laid on the Table of Rajya Sabha. In an election year, the Budgets may be presented twice—first to secure a Vote on Account for a few months and later in full.

DISTRIBUTION OF BUDGET PAPERS
In (he case of the Railway Budget, the sets are distributed to members from the Publications Counter after the Railway Minister has concluded his speech. The sets of General Budget arc distributed to members from several Booths in the Inner and Outer Lobbies arranged according to the Division Numbers of members. In case

59

Division Numbers have not been allotted, these booths are arranged State-wise. The budget papers are made available to members after the Finance Minister's speech is over, the Finance Bill has been introduced and the House has adjourned for the day.

DISCUSSION ON THE BUDGET
No discussion on Budget takes place on the day it is presented to the House. Budgets are discussed in two stages—the General Discussion followed by detailed discussion and voting on the demands for grants.

APPROPRIATION BILL
After the demands for grants have been passed by the House, a Bill to provide for the appropriation out of the Consolidated Fund of India of all moneys required meeting the grants and the expenditure charged -on the Consolidated Fund of India is introduced, considered and passed. The introduction of such Bill cannot be opposed. The scope of discussion is limited to matters of public importance or administrative policy implied in the grants covered by the Bill and which have not already been raised during the discussion on demands for grants. The Speaker may require members desiring to take part in the discussion to give advance intimation of the specific points they intend to raise and may withhold permission for raising such of the points as in his opinion appear to be repetition of the matters discussed on a demand for grant. Such advance intimation must be given before 10.00 hours on the day the Appropriation Bill is to be taken into consideration. No action is taken on intimations received after 10.00 hours. No amendment can be proposed to an Appropriation Bill, which will have the effect of varying the amount or altering the destination of any grant so made or of

60

varying the amount of any expenditure charged on the Consolidated Fund of India, and the decision of the Speaker as to whether such an amendment is admissible is final. An amendment to an Appropriation Bill for omission of a demand voted by the House is out of order. In other respects, the procedure in respect of an Appropriation Bill is the same as in respect of other Money Bills. [The procedure for presentation of the Budget in and its passing by Lok Sabha is as laid down in articles 112—117 of the Constitution of India, Rules 204—221and 331-E of the Rules of Procedure and Conduct of Business in Lok Sabha and Direction 19-B of Directions by the Speaker.] By convention the Railway Budget is presented sometime in -the third week of February at 1200 hours after the Question Hour. The General Budget was presented by convention, till 1998, on the last working day of February at 5 P.M. This convention was however, changed in 1999 when the General Budget was presented at 11 A.M. Since then the General Budget is presented at 11 A.M. on the last working day of February (except in 2000 when it was presented at 2 P.M.).

SUMMARY OF THE DATA COLLECTED
 

The data collected was the statements of budget with respect to the past 5 years. The data collected shows the detailed information about the actual expenditure and earnings of past 5 years.


The data collected also shows the budgeted earnings and expenditure. The data collected also helps in knowing the deviations between the budgeted and actual earnings and expenditure.

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Not only budgeted and actual the data also throws a light on the overall financial performance of Vijayawada division.

The data was sorted in the form of tables for the purpose of easy understanding. Even graphical representations were used wherever they are needed. Not only budget statements various other statements that are linked with budget statements are also collected to make the study effective.


Reasons for increase or decrease of various aspects in the budget are collected by personal interaction with the employees of the department.

Demand No 03-A 04-B 05-C 06-D 07-E 08-F 09-g 10-H 11-J 12-K 13-L

Demand Name General Superintendence and Service Repairs & Maintenance of permanent way & Works Repairs & Maintenance of Motive Power Repairs & Maintenance Carriage and Wagons Repairs & Maintenance Plant and Equipment Operating Expenses – Rolling stock and equipment Operating Expenses-Traffic Operating Expenses-Fuel Staff Welfare and Amenities Miscellaneous Working Expenses Provident Fund, Pension and other Retirement Benefits

62

DATA ANALYSIS AND INTERPRETATION
TABLE-1 BUDGET GRANT AND ACTUAL EXPENDITURE DURING THE YEAR OF 2004-05 DEMAN D NO. 03-A 04-B 05-C 06-D 07-E 08-F 09-G 10-H 11-J 12-K 13-L DEMAND NAME Genl. Supdt. R & M Way & Wk R & M R.Stock R & M M.Power R & M P&Equip. Optg. Exp – R.S. Optg. Exp. – Traffic Optg. Exp – Fuel Staff Welfare Misc. Exp. Retire. Benefits TOTAL BG 2004-05 142060 742703 335589 235496 359077 445109 673518 2133933 247601 236371 1407 5552864 (Fig. in thousands of Rs.) FG 2004-05 155996 876390 365171 261391 373726 473304 682344 2254116 291905 200169 1610 5936122 ACTUALS 2004-05 154351 885162 367259 262413 369346 468061 692440 2251186 300461 193375 2004 5946058

Bar chat showing budget grant and actual expenditure during the year of

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2004-05

2000 500 2000 000 1000 500 1000 000 Optg. Exp R & M R & M R & M R & M 500 00 0 Genl. 0 Optg. Exp Retire. Optg. Misc. A T AS 0 4 C UL 2 0 0 5 B 20- 5 G 0 40 F 20- 5 G 0 40

0 0 0 0 0 0 0 1 1 1 1 3 4 5 6 7 8 9 0 1 2 3 - - - - - - - - - - -

INTERPRETATION
The difference between the budget grant and actual expenditure with percentage and reasons are as under : 4-B: There is an increase of 19.18% due to increase in casual renewal works. 8-F: There is an increase of 5.15% due to less allotment of B.G towards Staff P.Us of Running staff. 9-G: There is an increase of 2.81% due to less allotment of B.G towards Staff P.Us of Operating staff. 11-J: There is an increase of 21.35% due to increase in cost of medicine and referral cases of Medical Department. 12-K: There is a decrease of -18.20% due to more allotment of B.G and less expenditure under staff training and less number of exgratia cases.

Staff

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TABLE-2 BUDGET GRANT AND ACTUAL EXPENDITURE DURING THE YEAR OF 2005-06 (Fig. in thousands of Rs) DEMAND NO. 03-A 04-B 05-C 06-D 07-E 08-F 09-G 10-H 11-J 12-K 13-L DEMAND NAME Genl. Supdt. R & M Way & Wk R & M R.Stock R & M M.Power R & M P&Equip. Optg. Exp – R.S. Optg. Exp. – Traffic Optg. Exp – Fuel Staff Welfare Misc. Exp. Retire. Benefits TOTAL BG 2005-06 160486 922118 433830 289814 434290 487544 710343 2372246 312830 196241 4234 6323976 FG 2005-06 166448 954309 415457 306349 442573 588876 759601 2400830 329185 122781 5612 6492021 ACTUALS 2005-06 164799 983013 420620 308192 438779 588471 757020 2388295 329752 119788 5570 6504299

Bar chat showing budget grant and actual expenditure during the year of

65

2005-06
3000000 2500000 2000000 1500000 1000000 500000 0 03-A 04-B 05-C 06-D 07-E 08-F 09-G 10-H 11-J 12-K 13-L

INTERPRETATION
The difference between the budget grant and actual expenditure with percentage and reasons are as under : 4-B: There is an increase of 6.60% due to increase in casual renewal works. 8-F: There is an increase of 20.70% due to less allotment of B.G towards Staff P.Us of Running staff. 9-G: There is an increase of 6.57% due to less allotment of B.G towards Staff P.Us of Operating staff. 11-J: There is an increase of 5.40% due to increase in cost of medicine and referral cases of Medical Department. 12-K: There is a decrease of -38.95% due to more allotment of B.G .

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TABLE-3 BUDGET GRANT AND ACTUAL EXPENDITURE DURING THE YEAR OF 2006-07 (Fig. in thousands of Rs) DEMAN D NO. 03-A 04-B 05-C 06-D 07-E 08-F 09-G 10-H 11-J 12-K 13-L DEMAND NAME Genl. Supdt. R & M Way & Wk R & M R.Stock R & M M.Power R & M P&Equip. Optg. Exp – R.S. Optg. Exp. – Traffic Optg. Exp – Fuel Staff Welfare Misc. Exp. Retire. Benefits TOTAL BG 2006-07 180908 1016729 449016 343375 509683 577224 795981 2667258 388496 135480 4400 7068550 FG 2006-07 180141 1048444 403945 339994 463215 565114 803727 2429774 334282 139192 8507 6716335 ACTUALS 2006-07 177421 1060952 400805 340669 459421 560339 801941 2346072 322566 138298 8592 6617076

*** where : BG – Budget Grant, FG – Final Grant

Bar chat showing budget grant and actual expenditure during the year of 2006-07

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8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 Genl. R&M R&M R&M R&M Optg. Exp Optg. Optg. Exp Staff Misc. Retire. TOTAL 0 0 0 0 0 0 0 1 1 1 13-L 3- 4- 5- 6- 7- 8- 9- 0- 1- 2-

BG 2006-07 FG 2006-07 ACTUALS 2006-07

INTERPRETATION
The difference between the budget grant and actual expenditure with percentage and reasons are as under : 4-B: There is a decrease of 4.34% due to decrease in contract payments. 5-C: There is a decrease of 10.73% due to decrease in number of locos for POH during the year under P.U-33. 7-E: There is an increase of 9.86% due to increase in expenditure towards repairs to TT Machines under PU-28. 11-J: There is an increase of 16.97% due to increase in Quarter repair works under PU-32. 13-L: There is a decrease of 95.27% due to excess B.G allotment and more number of DLI cases.

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TABLE-4 BUDGET GRANT AND ACTUAL EXPENDITURE DURING THE YEAR OF 2007-08 (Fig. in thousands of Rs) DEMAND NO. 03-A 04-B 05-C 06-D 07-E 08-F 09-G 10-H 11-J 12-K 13-L DEMAND NAME Genl. Supdt. R & M Way & Wk R & M R.Stock R & M M.Power R & M P&Equip. Optg. Exp – R.S. Optg. Exp. – Traffic Optg. Exp – Fuel Staff Welfare Misc. Exp. Retire. Benefits TOTAL BG 2007-08 202975 998218 508958 406556 541221 627574 937155 2731629 373267 179278 9067 7515898 FG 2007-08 193218 1065946 404012 356441 490755 610211 846293 2470204 348690 158182 15501 6959453 ACTUALS 2007-08 193218 1065946 404012 356441 490755 610211 846293 2470204 348690 158182 15501 6959453

*** where : BG – Budget Grant, FG – Final Grant

Bar chat showing budget grant and actual expenditure during the year

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of 2006-07
8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 Genl. R&M R&M R&M R&M Optg. Exp Optg. Optg. Exp Staff Misc. Retire. TOTAL 0 0 0 0 0 0 0 1 1 1 13-L 3- 4- 5- 6- 7- 8- 9- 0- 1- 2BG 2007-08 FG 2007-08 ACTUALS 200708

INTERPRETATION
The difference between the budget grant and actual expenditure with percentage and reasons are as under : 5-C: There is an increase of 20.61% due to increase in number of locos for POH during the year under P.U-33. 6-D: There is an increase of 12.32% due to increase in repairs to Wagons. 7-E: There is an increase of 9.32% due to increase in expenditure towards repairs to TT Machines under PU-28. 9-G: There is an increase of 9.69% due to increase in TA to Operating staff. 10-H: There is an increase of 9.57% due to increase in excess consumption of Electricity for Traction power under PU-32. TABLE-5

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BUDGET AND ACTUAL EXPENDITURE DURING THE YEAR 2008-09 (Fig. in thousands of Rs) DEMAND NO. 03-A 04-B 05-C 06-D 07-E 08-F 09-G 10-H 11-J 12-K 13-L DEMAND NAME Genl. Supdt. R & M Way & Wk R & M R.Stock R & M M.Power R & M P&Equip. Optg. Exp – R.S. Optg. Exp. – Traffic Optg. Exp – Fuel Staff Welfare Misc. Exp. Retire. Benefits TOTAL BG 2008-09 198515 1133627 494971 402643 516646 653873 865593 2461310 375655 189332 13318 7305483 FG 2008-09 298945 1454904 538723 517032 737355 867823 1333971 2593646 531686 265259 28702 9168048 ACTUALS 2008-09 300417 1450844 544649 506826 750622 867285 1339401 2529070 510931 240721 28526 9069292

Bar chat showing budget grant and actual expenditure during the year of 2006-07

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3000000 2500000 2000000 1500000 1000000 500000 0 03- 04- 05- 06- 07- 08- 09- 10- 11- 12- 13A B C D E F G H J K L

BG 2008-09 FG 2008-09 ACTUALS 2008-09

INTERPRETATION
The difference between the budget grant and actual expenditure with percentage and reasons are as under : There is a overall increase of 24% between budget grant and actual expenditure which is mainly due to payment of 6th pay commission arrears having impact on all most all the demands except 10H and 13L. 6-D: There is an increase of 26%. This is due to POH of more number of wagons besides PC arrears. 7-E: There is an increase of 45% which is due to increase in expenditure towards repairs to TT Machines under PU-28 besides PC arrears. 9-G: There is an increase of 55% which is mainly due to payment of PC arrears increase in TA to commercial and Operating staff. TABLE-6 THE OVERALL EARNINGS OF THE DIVISION Financial Performance

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(Fig. in crores of Rs.) Details Pass. Earnings Other Coaching Goods Sundries TOTAL 2004-05 260.98 34.97 238.89 23.38 558.22 2005-06 266.53 42.58 313.58 9.82 632.51 2006-07 305.86 40.28 426.88 10.98 784.00 2007-08 350.18 42.25 484.25 15.59 891.80 2008-09 376.96 45.04 693.45 16.58 1132.03

Bar chat showing the overall earnings of the division financial performance
1200 1000 800 600 400 200 0 2004-05 2005-06 2006-07 2007-08 2008-09 Pa s E rning s. a s Other C c oa hing G oods S undries T AL OT

INTERPRETATION The total earnings of the Division for the year ending 31.03.05 is Rs.558.22 crores, for the year 31.03.06 is Rs.632.51 Crores, for the year ending 31.03.2007 is Rs.784.00 Crores and for the year ending 31.03.2008 is Rs.891.80 Crores, for the year ending 31.03.2009 is Rs.1132.03 Crores. Thus there is increase progressively i.e., 24% in 06-07, 40% in 07-08 and. TABLE-7 PERFORMANCE EFFICIENCY INDEX OF THE DIVISION (Fig. in crores of Rs.) Details Working Expenses 2004-05 594.60 2005-06 650.04 2006-07 661.70 2007-08 695.94 2008-09 906.92

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Earnings P.E.I%

558.22 106.51

632.51 102.77

787.00 84.07

891.70 78.05

1132.03 80.10

Bar chat showing performance efficiency index of the division
12 00 10 00 80 0 60 0 40 0 20 0 0 20 04 05 2 500 06 20 06 0 7 20 07 08 2 800 0 9

W orking E en xp ses Ea rning s P.E.I%

INTERPRETATION There is a gradual increase in surplus when compared to the year 2004-05 and 2005-06. That is to earn Rs.100/- expenditure incurred was Rs.102.77 in 2005-06, Rs.84.07 in 200607, Rs.78.05 in 2007-08 and Rs.80.10 in the year 2008-09.

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TABLE-8 TARGETED EARNINGS AND ACTUAL EARNINGS (Fig. in crores of Rs.)
Years Particulars Targeted Earnings Actual Earnings 2004-05 556.42 558.22 2005-06 590.17 632.51 2006-07 556.42 784.00 2007-08 650.51 891.80 2008-09 1102.80 1132.03

Bar chat showing targeted earnings and actual earnings

1200 1000 800 600 400 200 0 2004- 2005- 2006- 2007- 200805 06 07 08 09 Targeted Earnings Actual Earnings

INTERPRETATION
On a comparison of Targeted Earnings and Actual Earnings it can be seen that there is a gradual increase in Actual Earnings when compared to the Actual Earnings of the year 2004-05.

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TABLE-9 PERCENTAGE OF CHANGE IN EXPENDITURE (Fig. in thousands of Rs) DEMAND NO. 03-A 04-B 05-C 06-D 07-E 08-F 09-G 10-H 11-J 12-K 13-L AE 2004-05 154351 885162 367259 262413 369346 468061 692440 2251186 300461 193375 2004 5946058 AE 2005-06 164799 983013 420620 308192 438779 588471 757020 2388295 329752 119788 5570 6504299 AE 2006-07 177421 1060952 400805 340669 459421 560339 801941 2346072 322566 138298 8592 6617076 AE 2007-08 193218 1065946 404012 356441 490755 610211 846293 2470204 348690 158182 15501 6959453 AE 2008-09 300417 1450844 544649 506826 750622 867285 1339401 2529070 510931 240721 28526 9069292

Bar chat showing percentage of change in expenditure

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3000000 2500000 2000000 1500000 1000000 500000 0 0 0 0 0 0 0 0 1 1 1 1 3- 4- 5- 6- 7- 8- 9- 0- 1- 2- 3A B C D E F G H J K L AE 2004-05 AE 2005-06 AE 2006-07 AE 2007-08 AE 2008-09

INTERPRETATION
The miscellaneous working expenses have decreased by 2% when compared to the previous year 2007-08. The expenditure on provident funds; pensions, have increased almost 56% in the year 2007-08 when compared to 2006-07 the expenditure on general superintendent, operating expenses of traffic has increased to 7% in the year 2008-09. The expenditure on repairs and maintenance of carriages and operating expenses has increased to 8% in 2007-08. The operating expenses on fuel and expenditure on repairs and maintenance have increased to 3% in 2008-09.

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ANALYSIS
There is almost 42% increase in miscellaneous working expenses. The expenditure on staff welfare increased almost 52% in the year 2008-09 when compared to 2007-08. The expenditure on general superintendence, operating expense of fuel, operating expenses of traffic and amenities to staff has increased to 6% in the year 2008-09. The expenditure on repairs and maintenance of motive power, carriages and wagons, plant and equipment has increased to 16% 2008-09. The operating expenses on rolling stock have increased to 28% and repairs and maintenance of permanent way and works have increased to 11% in 2008-09.

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TABLE-10 ACTUAL EXPENDITURE FOR THE YEARS OF 2005, 2006, 2007, 2008, 2009 (Fig. in thousands of Rs) DEMAND NO. 03-A 04-B 05-C 06-D 07-E 08-F 09-G 10-H 11-J 12-K 13-L AE 2004-05 154351 885162 367259 262413 369346 468061 692440 2251186 300461 193375 2004 AE 2005-06 164799 983013 420620 308192 438779 588471 757020 2388295 329752 119788 5570 AE 2006-07 177421 1060952 400805 340669 459421 560339 801941 2346072 322566 138298 8592 AE 2007-08 193218 1065946 404012 356441 490755 610211 846293 2470204 348690 158182 15501 AE 2008-09 300417 1450844 544649 506826 750622 867285 1339401 2529070 510931 240721 28526

Bar chat showing actual expenditure for the years of 2005, 2006, 2007, 2008, 2009

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3000000 2500000 2000000 1500000 1000000 500000 0
06 -D 08 -F 10 -H 03 -A 04 -B 12 -K

AE 2004-05 AE 2005-06 AE 2006-07 AE 2007-08 AE 2008-09

INTERPRETATION
The earnings of the Division have increased from 4% to 13% in 2006-07 to 200708 respectively. The expenditure of the Division has also increased from 8% to 10% during the period of the study. The Division has suffered a deficit of 3% during the period of study. The expenditure on repairs and maintenance on plant and equipment has increased to 19% in 2007-08. The expenditure on miscellaneous working expenses has decreased to almost 42% in 2007-08. The operating expenses of the Division have increased from 1% to 6% during the period of study. Out of the total expenditure of the firm almost 40% of the expenditure will be spent for the Operating Expenses Fuel.

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TABLE-11 PERCENTAGE OF CHANGE IN EXPENDITURE (Fig. in thousands of Rs) DEMAND NO. 03-A 04-B 05-C 06-D 07-E 08-F 09-G 10-H 11-J 12-K 13-L AE 2004-05 154351 885162 367259 262413 369346 468061 692440 2251186 300461 193375 2004 AE 2005-06 164799 983013 420620 308192 438779 588471 757020 2388295 329752 119788 5570 PERCENTAGE OF CHANGE 7% 11% 15% 17% 19% 26% 9% 6% 10% -38% 178%

Bar chat showing percentage of change in expenditure

81

3000000 2500000 2000000 A E 1500000 A E 1000000 500000 0 -500000
6D 0 8F 1 0H 1 2K 0 4B 0

PERCENTA E O G F CHA E NG

INTERPRETATION
When compared to the previous year 2004-05, the General Superintendence of the division has increased by 7% in 2005-06, Fuel for by 6%, staff welfare for the year 10%, miscellaneous working expenses by 38%, expenses Traffic by 9%. retire benefits by 178%, and Operating

82

TABLE-12 PERCENTAGE OF CHANGE IN EXPENDITURE (Fig. in thousands of Rs) DEMAND NO. 03-A 04-B 05-C 06-D 07-E 08-F 09-G 10-H 11-J 12-K 13-L AE 2005-06 164799 983013 420620 308192 438779 588471 757020 2388295 329752 119788 5570 AE 2006-07 177421 1060952 400805 340669 459421 560339 801941 2346072 322566 138298 8592 PERCENTAGE OF CHANGE 7.1% 7% -5% 10% 4% -5% 6% -2% -2% 13% 35%

Bar chat showing percentage of change in expenditure

83

3000000 2500000 2000000 1500000 1000000 500000 0
06 -D 08 -F 10 -H 12 -K 04 -B

AE AE P E R C E N TA G E OF C HA NGE

-5 0 0 0 0 0

INTERPRETATION
When compared to the previous year 2005-06, the General Superintendence of the division has increased by 7.1% in 2006-07, Fuel by 2% staff welfare for the year 2%, miscellaneous working expenses by 13%, retire benefits by 35%, and Operating expenses Traffic by 6%.

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TABLE-13 PERCENTAGE OF CHANGE IN EXPENDITURE (Fig. in thousands of Rs) DEMAND NO. 03-A 04-B 05-C 06-D 07-E 08-F 09-G 10-H 11-J 12-K 13-L AE 2006-07 177421 1060952 400805 340669 459421 560339 801941 2346072 322566 138298 8592 AE 2007-08 193218 1065946 404012 356441 490755 610211 846293 2470204 348690 158182 15501 PERCENTAGE OF CHANGE 8% 1% 1% 4% 6% 8% 5% 5% 7% 13% 45%

Bar chat showing percentage of change in expenditure

85

3000000 2500000 2000000 1500000 1000000 500000 0 03-A 04-B 05-C 06-D 07-E 08-F 09-G 10-H 11-J 12-K 13-L

INTERPRETATION
When compared to the previous year 2006-07, the General Superintendence of the division has increased by 8% in 2007-08, Fuel by 7% staff welfare for the year 5%, miscellaneous working expenses by 13%, retire benefits by 45%, and Operating expenses Traffic by 5%.

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TABLE-14 PERCENTAGE OF CHANGE IN EXPENDITURE (Fig. in thousands of Rs) DEMAND NO. 03-A 04-B 05-C 06-D 07-E 08-F 09-G 10-H 11-J 12-K 13-L AG 2007-08 193218 1065946 404012 356441 490755 610211 846293 2470204 348690 158182 15501 AG 2008-09 300417 1450844 544649 506826 750622 867285 1339401 2529070 510931 240721 28526 PERCENTAGE OF CHANGE 36% 27% 26% 30% 35% 30% 37% 2% 32% 34% 46%

Bar chat showing percentage of change in expenditure

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3000000 2500000 2000000 1500000 1000000 500000 0 03-A 04-B 05-C 06-D 07-E 08-F 09-G 10-H 11-J 12-K 13-L

INTERPRETATION
When compared to the previous year 2007-08, the General Superintendence of the Division has increased by 36% in 2008-09, Fuel by 32% staff welfare for the year 2%, miscellaneous working expenses by 34%, retire benefits by 46%, and Operating expenses Traffic by 37%.

TABLE-15 COMPARITIVE ANALYSIS OF EXPENDITURE AND EARNINGS DURING

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THE FOLLOWING YEARS (Fig. in thousands of Rs.) DETAILS 2004-05 2005-06 2006-07 2007-08 EXPENDITURE 5946058 6504299 6617076 6959453 EARNINGS 5582200 6325100 7870000 8917000 Bar chat showing comparitive analysis of expenditure and earnings during following years
12000000 10000000 8000000 DETAILS 6000000 4000000 2000000 0 1 2 3 4 5 EXPENDITURE EARNINGS

2008-09 9069292 11320300 the

INTERPRETATION
On the comparison of performance of the Division for the period from 2004-05 to 2008-09 it can be seen that the Division has improved efficiency from the year 2007-08 to 2008-09 by reducing the expenditure and increasing the earnings under passengers and goods categories. The Division has suffered losses during the years of 2004-05 to 200506 because increasing expenditure and reduction in the earnings.

FINDINGS
 

There is a constant increase in the earnings of the Division during the period of study. The earnings from passenger services have increased constantly year by year.

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There is also an increase in earnings from freight services during the period of study.

After comparing 07-08 incomes and expenditures, the division is very well improved in reducing the expenditure and increasing the earnings. This is because of increase Passenger and Goods services.

The expenditure on repairs and maintenance of the division remain constant for 2 years and increased highly in 2006-07.On other hand the total expenditure slowly increased over the years.

The gross receipts of the firm have been gradually increasing over the years and improved well in 2008-09.

Railway board will suggest the spending limits (maximum limit for expenditure) for each Demand at the time of granting the budget. Division is not supposed to cross this limit. And Vijayawada Division is almost successful in keeping the expenditure within the spending limits.

But the Division suffered losses in the year 06-07. The expenditure is more than earnings during this period. This is mainly due to the Earnings were low with the increase in working expenses. But the Division was successful in increasing the Earnings during the subsequent years.

The year 07-08 is one of the successful years because the Division is able to recover almost all the losses that are occurred in the previous years i.e. 05-06 & 0607.

There is substantial increase in the expenditure of the Division during the period of study, where the organization is having high fuel expenditure.

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  

The earnings from passenger services have increased constantly year by year. There is also an increase in earnings from freight services during the period of study. The expenditure on repairs and maintenance of the Division remain constant for 2 years and increased highly in 2006-07. On other hand the total expenditure slowly increased over the years.

The expenditure on staff welfare also rapidly increased year by year.

SUGGESTIONS

The organization was not able to increase their sundry earnings over the years. So necessary steps have to be taken to increase the sundry earnings by implementing

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Management techniques and managing the Assets efficiently.

Electrifying the remaining un-electrified tracks helps in increasing the efficiency by way of speedy transport and in reducing the costs towards HSD oil.

The organization has to take steps to maintain cordial relations with Business community and Industry to attract more Traffic so as to increase Earnings.

Recruitment of Software personnel in the organization enables reduction in expenses related to office establishment thereby increase in profits.

CONCLUSION
• Number of reviews on budget may be reduced so that it helps in reducing paper work as well as saves man-hours.

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The monthly Financial Reviews are conducted to compare the performance efficiency of the division. The results of these financial reviews are to be best utilized by identifying areas of unnecessary expenditure so as to cortile the same.

Electrifying the remaining un-electrified tracks helps in minimizing the expenditure on fuel, as it is almost 45% of total expenditure.

BIBLOGRAPHY
1. R.K. Sharma and Shashi K.Guptha ,Management accounting (principles and practice).

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2. Dr.S.N. Maheswari, Financial managent. 3. Blocher, Chen, Cookins, Lin, Cost Management a Strategic Emphasis, TMH,3/e 2006
4. 5.

Colin Drury, Management and Cost Accounting, Thomson-2007 Creswell, J. W. Qualitative inquiry and research design: choosing among five traditions.Sage Publications. (1998).

6.

Denzin, N. K., & Lincoln, Y. S. Collecting and interpreting qualitative materials. (2nd ed.). Sage. pub( 2003).

7. Jain S.P and .Narang K.N, Cost and Management Accounting, Kalyani Publishers, New Delhi, 2006. 8. James Jiambalvo, Managerial Accounting, John Wiley & Sons, Inc.New Delhi,2007
9.

Gummesson, E. Qualitative methods in management research. (2nd ed.). Sage. (2000).

10. Manash Gupta, Cost Accounting Principles and Practice, Pearson Education,2006 Web site www.indinrailways.ac.in

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