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BLOG - ER Ramachandran

Sunday, July 26, 2009

Railway Profits - Who is Right?

While presenting the Rail Budget, the new Raiway Minister Ms. Mamata Bannerjee informed the year-end surplus for the year 2007-2008 was RS. 8000 Crores whereas Mr. Lalu Prasad Yadhav the previous High- flying Railway Minister had claimed the accumulated profit over the last five years is Rs. 90,000 Crores.

Mamata Bannerjee has promised to come out with a white paper on the total operation for the last 5 years, much to the discomfiture of Lalu. The Prime Minister welcomed her decision to bring a white Paper.

The question is:

1. The Prime Minster himself a renowned economist; His Finance Minister till recently is also a product of Harvard and has presented ‘dream ‘Budgets several times.

2. The Planning commission has several experts including Montek Singh Ahluwalia.

3. Most of Newspapers have well known economics expert writing a weekly column.

The profit mentioned by Mamata is around Rs. 8000 crores at the end of 2007-2008. Assuming it grew at the same flat value the last 5 years, the profit at best should be Rs. 40.000 crores for the last 5 years.

The claims of Lalu Prasadji of 90, 000 crores for the same period is, more than 100 % of the probable actual figures.

How come there is such a variance and the question that comes to mind is , has any of the experts checked and cross checked whether the claims made by the previous Rail Minister was correct?

We talk of failure of Lehman Bros and Sathyam etc where the needle of suspicion is on the auditors.

How come such wide and wild figures are bandied about in Planning commission and Parliament? No doubt a white Paper will help. But shouldn’t such figures be checked and audited for their veracity before making claims how international Business schools are making Indian Railway operations as their case study?