GOVERNMENT OF INDIA

MINISTRY OF RAILWAYS

(RAILWAY BOARD)

INDIAN RAILWAY FINANCIAL CODE

VOLUME-I

( SECOND REVISED EDITION -2022 )

((Embodying All Correction Slips Issued upto No. 01 Dated 25.08.2023)

 MENU

PREFACE

Problems of Railway Financial Management and the techniques developed in tackling these have become complex and varied over the years.  The Code Revision Cell set up in 1973 in pursuance to the recommendations of the Railway Convention Committee, 1971 has, therefore, rightly considered the need for a separate Railway Financial Code to serve as a compendium of general rules and orders on financial matters including compilation of annual budget.

2.  THE INDIAN RAILWAY FINANCIAL CODE includes revised version of a part of the erstwhile Indian Railway General Code, which has now been rewritten in two separate texts of which this book is the second text, the first being the introductory text published separately under the title THE INDIAN RAILWAY ADMINISTRATION AND FINANCE-AN INTRODUCTION.

3.  The Indian Railway General Code was first issued as a 'provisional issue' on 5th September, 1938 ; it was up-dated and re-printed on 5th January, 1942 as the first edition, the appendices embodied in the 'provisional issue' being printed for the first time in a separate volume.  A re-print was issued in April 1950 and a second re-print in May 1952.  A revised edition of the Code, incorporating changes consequent on promulgation of the Constitution, and those arising out of the 1949 Railway Convention, was issued on September 14, 1954.  The first re-print of this revised edition was issued five years later, and the second re-print issued on August 22, 1970 has been the edition in use before the present revision of the Code.

4. The book as compiled deals with various important aspects of financial management like Project Appraisal, Budget Formulation, Reporting and Contro1, Parliamentary Financial Control, Award of Contract, Allocation of Expenditure, 'Rules relating to Inter-Railway and Inter Departmental services, Contingent Expenses, Investigation of Losses, etc.  A Chapter on the procedure dealing with Audit-Report presented by the Comptroller and Auditor General of India and its consideration by Public Accounts Committee of Parliament has been added, deleting Chapter VIII 'Communications from Audit and action thereon' from the existing Accounts Code.  The existing Chapter XI on ‘Incidence of the Cost of Works for non-Railway Departments/Ministries' has been transferred to the Engineering/ Mechanical Code, Chapter XIV on 'Cash, Cheques and Vouchers', excluding the section regarding 'Cash Imprests' has been transferred to the Accounts Code and Chapter XVI on 'Bills for Pay and Allowances' has been transferred to the Establishment manual.  The miscellaneous matters dealt with in Chapter XX, excepting the section regarding 'Annual Reports of Railways', have not been incorporated in this Code nor in any other Code or Manual issued by the Board.  These should be included in the Manuals of 0ffice Procedure of the Zonal Railways., Production Units, etc.  The Appendices which were printed in a separate volume of the General Code have now been embodied in the Financial Code, vol. I, except Appendices relating to the classification of expenditure and earnings which have been embodied in Volume II of this Code.

5.  Based on the recommendations of a Task Force constituted in 1973 (in pursuance of the recommendations of the Railway Convention Committee 1971) and as accepted by the Government, restructured Demands for, Grants and Revised Classification of Revenue and Capital Expenditure have been introduced with effect from 1st April, 1979.  The provisions contained in this Code reflect the revised System.

6.  This Code supersedes all existing rules and orders issued by the Railway Board on the subjects dealt within it.  Unless contrary intention is expressed or implied in the wording of the Code rules, provisions of this Code are mandatory and binding on all Indian Railways.  For deviations from the mandatory rules, sanction of Railway Ministry should be obtained.  In accordance with the Government's policy, this Code is being issued as a diglot edition.

7.  The Railway Board will be glad to consider any criticism and suggestions from the Railway Administrations. Any errors or omissions which may be found in this edition may also be brought to the notice of the Secretary, Railway Board.

PREFACE 

(First Reprint)

This edition is a reprint of the Indian Railway Finance Code, Volume 1, 1982 edition, incorporating additions and alterations introduced through Correction Slips issued up to number 16, dated 30th May 1991.  

 PREFACE 

(Second Reprint) 

This edition is a reprint of the Indian Railway Finance Code, Volume 1, 1982 edition, incorporating additions and alterations introduced through Correction Slips issued up to number 52 , dated 06th August, 1998. 

 PREFACE 

(Second Revised Edition 2022)

Last revision of Indian Railway Financial Code Vol-I was done in the year 1954 which was later re-printed in the year 1998. Since 1998, a lot of changes have taken place in Indian Railways in terms of focus, orientation and decision making. This has changed the approach to financial management of Indian Railways substantially. A need was being felt to make Indian Railway Financial Code dynamic in line with modern times. It was also felt that Indian Railway Financial Code should help Indian Railways in taking sound business decisions without diluting its social and economic responsibilities. With these aspects in mind, Indian Railway Financial Code has been updated comprehensively.
 

While updating the Code, it has been kept in mind that this document remains as dynamic as possible to avoid need for frequent revisions. One approach which has been taken is to avoid quantifying any monetary limit. In place of quantifiable monetary limit a term ‘monetary limit as prescribed by Board from time to time’ has been used. Similarly while mentioning the softwares like IPAS, IRPSM etc a term ‘or any other software’ has been used additionally. Though all efforts have been made to include latest guidelines, yet there are chances that some omissions have crept in. Any such omissions or corrections required, may be pointed out to make necessary corrections.

INTRODUCTORY NOTES

1. Index letters for Codes-The following Index letters are used for distinguishing the several Indian Railway Codes from each other :-

A-      Accounts Department.

E-       Engineering Department.

F-       Financial Code.

G-      Administration and Finance-an Introduction.

R-      Establishment Code.

S-      Stores Code.

T-      Traffic Department (Commercial).

W-     Mechanical Department (Workshops).

2.       Paragraph Numbers-For convenience of indexing and of reference, the paragraphs have been numbered according to a 3/4-figure "Code", in which the last two figures give the number of the paragraph and the remaining figures the number of the Chapter.  Thus paragraph 101 of any code is paragraph I of Chapter I of that code and paragraph 1421, paragraph 21 of Chapter XIV.
 

3.       Reference to paragraphs-Reference to the paragraphs of a code is made by putting the paragraph number, suffixed by the index letter of the code concerned.  Thus 1335-RI means paragraph 35 of Chapter XIII of the Indian Railway Establishment Code Volume I and 5 Appendix VIII-RI means paragraph 5 of Appendix VIII of the Indian Railway Establishment Code Volume I.
 

4.       Reference to "Forms"-The "forms" referred to in any of the Indian Railway Codes (except the Establishment Code) take the number of the paragraph of the code in which they are described, the index letter, of the code in question being prefixed to the number of the paragraph in which the form is illustrated.  Thus W-703 is the form that is described and illustrated in paragraph 3 of Chapter VII of the Indian Railway Code for the Mechanical Department (Workshops).
 

5.       Correction Slips-Subsequent correction slips will be printed on one side and issued in separate series for each code so, that these may be cut and pasted against the relevant rules.
 

6.       Index to Correction Slips-To facilitate reference to correction slips that have been issued to the Codes, an up-to-date index of correction slips is published from time to time showing for each Code the paragraph or rule numbers affected by correction slips and the numbers of such correction slips.  This index may be pasted inside the cover of each Code.

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CONTENTS

CONTENTS

CHAPTER-I

FINANCIAL ORGANIZATION HISTORICAL BACKGROUND

Evolution of Financial Organization on the Railways and its functions, 101-115, Standards of financial propriety, 116.

CHAPTER-II

FINANCIAL APPRAISAL OF RAILWAY PROJECTS

General Principles, 201- 202. Scrutiny by Accounts officer, 203. Test of Remunerativeness, 204-207. Provision of Rolling Stock, 208-209. Scheme for change of traction, 210. Revenue estimate,211-214. Assessment of working expenses, 215-217. Provision for depreciation, 218. Normal Lives of assets, 219. Technique of financial appraisal of projects, DPR for Technical and financial appraisal of projects, 220-220 A. Accounting rate of return method, 221-222. Pay back period method, 223-224. Discounted cash flow, 225. Net present value (NPV) or Net Present Worth (NPW), 226-227. Annual Cash Flows, 228. Rate of return under D.C.F., 229-232. Residual Value, 233. Alternative Schemes, 234. Economic Evaluation, 235. Replacements and Renewals, 236 - 237. Reconditioning, 238. Scrapping, condemning and abandoning assets, 239-240. Second hand value, 241 - 242. Post-projects appraisal, 243. New Lines, 244-247. Open Line Works, 248-252.  

Check list with detailed notes for guidance of zonal Railways and concerned branches in Railway Board's office, in the preparation of Project Estimates, Annexure A. Sinking fund Payment Table, Annexure B. Interest formulas and tables for Discounted Cash flow techniques, Annexure C. Rate of return-using Discounted Cash Flow method, Annexure D. Examples illustrating application of DCF techniques in the financial appraisal of railway projects, Annexure E. Economic evaluation of Railway investments, Annexure F. Examples illustrating the method of financial justification to be adopted in the replacement, reconditioning or abandonment of existing assets, Annexure G. Examples, illustrating the determination of second hand value of assets, Annexure-H. Economic Appraisal Framework for evaluation of railway project, Annexure- I. Proforma for submission of Detailed Project Report, Annexure-J. 
                                                           

CHAPTER-III

BUDGET 

Section I-General

Budget- A Constitutional and Management Document, 301. Voted and Charged Expenditure, 302. Charged Expenditure, 303. Budget, and an instrument of Parliamentary financial control and expenditure control, 304. Demands for Grants, 305-307. Glossary of terms used, 308. 

Section II -Preparation of Budgets by Railway Administrations

Responsibility for framing the Estimates, 309-312. GROSS RECEIPTS, 313. Coaching Earnings, 314. Goods Earnings, 315. Sundry Other Earnings, 316. Receipts of Worked Lines, 317. Refunds of Revenue, 318. Explanation of variations in receipts, 319 - 322. Review of Traffic outlook, 323. Ordinary Working Expenses, 324 - 325. Explanation of Variations, 326 - 328. Estimate of Cost of Establishments, 329–330. Suspense Heads, 331. Repairs and Maintenance Expenditure of Rolling Stock, 332. Cost of fuel, 333. Miscellaneous Expenditure, 334. List of Credits of Recoveries, 335. Summary of Ordinary Working Expenses, 336. Summary of Revenue Receipts and Expenditure, 337. Appropriations to and Expenditure to be met out of Railway Funds, 338 – 343. Payments to General Revenues, 345. Works Machinery and Rolling Stock Budget, 346 – 347. Inventories, 348. Civil Demands, 349 – 353. 

Section III- Compilation and Scrutiny of Budget in the Railway Board.

COMPILATION AND SCRUTINY OF BUDGET IN THE RAILWAY BOARD, 354 - 356. Submission to the Minister, 357 - 358. Appropriation Bill, 360.

Section IV-Administering the Budget

Distribution of funds by the Railway Board, 361-364. Distribution of funds by General Managers to Lower Authorities, 365-368. Responsibility of the Railway Board to avoid Excess over Grants or Expenditure on a New Service, 369-370. Responsibility of Railway Administrations in case of excesses or lapses, 371 - 372. Powers of Railway Administrations in regard to emergent and inevitable expenditure,  373 - 374. Re appropriations, 375. Powers of the Railway Board, 376. Powers of Railway Administrations, 377 - 381. Unforeseen Expenditure operation of the Contingency Fund of India, 382. Review of Expenditure, 383 - 384. Final Modification Statement, 385-389. Supplementary and Excess Grants, 390-391.  

Heads of Demands & Authorities Responsible for Control over Expenditure, Annexure-I. List of Budget forms and Connected statements, Annexure-II. Statement of Income-tax, Interest on Advances by Central Government and Interest on Debt and other obligations, Annexure-III. Statement of Debt transactions-I-Small Savings, Provident Fund, etc. J-Reserve Funds, K- Deposit and Advances, Annexure- IV. Statement of Debt Transactions-K-Deposits and Advances L-Suspense and Miscellaneous- under Public Account and F-Loans and Advances under Consolidated Fund, Annexure-V. Statement of Remittance Transactions, Annexure-VI. 

CHAPTER-IV

PARLIAMENTARY FINANCIAL CONTROL APPROPRIATION ACCOUNTS

General, 401-402. Form of Accounts and Dates of submission by the Railways, 403 - 407. Figures to be exhibited in the Accounts, 408. Explanations of variations, 409 - 415. Re- appropriation, 416. Savings due to postponement of Expenditure or Abandonment of Schemes, 417. Exhibition of Recoveries or Credits, 418. Unadjusted Assets and Liabilities of Special Schemes or Projects, 419. Offices closed or transferred to another Department/Ministry or Governments, 420. Purchase or Disposal of Immovable Property, 421. Stores and Manufacture Suspense, 422. Consultation with the Executive, 423. Losses, 424 - 425. Ex-gratia payments,  426. Block Accounts (including Capital Statement comprising the Loan Account),  Balance Sheet and Profit Loss Account, of Railways, 427. Block Account, 428 - 431. Accounts of Production Units, 432. Other Accounts and Subsidiary Statements, 433. Percentage of Working Expenses to Earnings, 434. Review of Works Programme, 435. Statement of Credits to Capital for Retired Assets, 436. Stores Account, 437. Statement of Stores Transactions, 438. Stock Verification and Revaluation, 439. Summary of Accounts, 440. Reconciliation Statement of Annual Expenditure, 441. Certificate of Sanctioned Expenditure and Statement of Unsanctioned Expenditure, 442 - 446. Estimates provisionally accepted by Accounts or Audit, 447-448. Appropriation Accounts of Civil Grants, 449 - 451. Explanations of Variations in Civil Grants, 452 - 454. Consolidated Appropriation Accounts of Railways, 455-456. Main contents, 457-458. Reconciliation with the combined Finance and Revenue Accounts, 459. Submission to Audit, 460 461. Consolidated Accounts of Civil Grants, 462-463. Review of Appropriation Accounts, 464. Examination by Public Accounts Committee, 465-466.  

Formulae for working out the cost of replacement by like asset in respect of various types of Assets, Annexure-I. Capital Statement (Pt. I and II), Annexure-II. Balance Sheet, Annexure-III. Profit and Loss Account, Annexure-IV. Diesel Locomotive Works Manufacturing Account, Annexure-V. Diesel Locomotive Works Statement of Out-turn, Annexure-VI. Depreciation Reserve fund, Annexure-VII. Development fund Account, Annexure-VIII. Pension Fund Account, Annexure-IX. Accident Compensation Safety and Passenger Amenities Fund, Annexure-X (Deleted). Appropriation Accounts (Stores Account), Annexure-XI. Results of Stock Verification and Revaluation of Stores, Annexure-XII . Grain Shops Profit and Loss Accounts, Annexure XIII. Railway Catering Profit and Loss Account, Annexure-XIV. Balance Outstanding under Suspense, Annexure –XV. Statement of expenditure held under objection, Annexure-XVI.  Under charges detected by Accounts or Audit, Annexure-XVII. Statement showing Remission and Abandonment of claims to Revenue, Annexure-XVIII.  Review of expenditure on important Open 'line Works and New Construction, Annexure XIX. Working Expenses and other revenue charges relating to Strategic Lines ,Annexure XX. Statement of estimated and actual credits or recoveries for the year 2020-21, Annexure XXI. Statement of Losses etc., Annexure-XXII. Irregular re appropriations, Annexure-XXIII. Important misclassification and other mistakes detected, Annexure-XXIV. Consolidated Block account  (Commercial).

CHAPTER-V 

BUDGETARY AND EXPENDITURE CONTROL FINANCIAL/MANAGEMENT REPORTING
 

Budget, an instrument of Parliamentary financial control and expenditure control,  501. Gross Revenue, 502 - 503.  Revenue and Capital Expenditure, 504-505. Revenue Expenditure, 506 - 507. Proportionate Budget Allotment, 508-510. Monthly Statement of Approximate Receipts and Expenditure, 511. Revenue Allocation Registers, 512. Monthly Financial Reviews, 513-516. Re-appropriations, 517-518. Expenditure on Acquisition, Construction and Replacement of Railway Assets, 519. Watch over Progress of Expenditure, 520-523. Review of expenditure, 524-526. Review of Capital Expenditure, 527-533. Control of Expenditure against the Capital Suspense Grants, 534 - 535. Monthly Review of Suspense Grant, 536 - 538. Financial Adviser and Chief Accounts Officer's Review of monthly Receipts and Expenditure, 539. Exchequer Control, 540. Importance and limitations of Exchequer Control, 541 – 544. Implementation of Exchequer Control, 545. Assessment of Cash Outgo-General Guidelines, 546. Staff, 547. Fuel, 548. Works and Stores, 549-550. Civil Grants, 551. Railway Board Contracts, 552 - 553. Assessment of Quarterly Cash Outgo, 554. Control of cash disbursements, 555. Calendar of returns, 557. Watch over Expenditure and Revenue of the Last quarter of the year, 559. Annual Review of Expenditure, 560. Annual Reports of Railways, Object and Scope, 561 – 562. Responsibility for preparation, 563. Section –I Report Proper, 564. Section II-Financial Statements, 565. Section III -Analysis of Working, 566. Section IV-Appendices,  567. Powers of Chairman Railway Rates Tribunal, Annexure-I (Deleted). Powers of General Managers, of Indian Railways, Annexure –II. Assessment of cash requirement, Annexure –III. Cash Budget for the year, Annexure-IV. Cash Outgo Quarterly Variation Statement, Annexure-V.

CHAPTER-VI

CONTRACTS GENERAL PRINCIPLES

Types of contracts, Departments responsible for awarding them, 601. Tender System, 602-603. Invitation to tender, 605-606. Constitution of Tender Committees, 614-619. Earnest Money and Security Deposits, 620. Contract Agreements, 621. Execution of contract prior to Commencement of Works or supplies, 622-624. Contract Documents, 625. Conditions of Contract, 626-627. Variation of contract Conditions, 628. Settlement of Disputes, 629.

CHAPTER-VII

ALLOCATION OF EXPENDITURE

General Principles of Allocation, 701 - 716. Land, 717 -723. Surveys, 724. New Lines, 725 - 732. Lines partially opened for traffic, 733. Calculating Machines, and other office appliances, 737. Revenue Sidings, 738. Additions of Ballast, 739. Temporary and Experimental Works, 740. Maintenance of Quarters for Construction Staff, 741. Rolling stock, 742 -748. Stand-bys, 749. Spares, 750 - 752. Replacement and Renewals, 753 - 758. Renewals of rails, etc, 759 - 760. Renewals of Carriages and Brake-Vans, 764. Renewal of self-propelled Coaches, 765. Renewals of Wagons, 766 - 767. Renewals of Rolling Stock parts, 768 -771. Incidental Works, 772 - 774. Expenditure on Ceremonial Occasions, 775. Costs of Tools and Plants and Special Posts, 776. Inter-Railway Transfer of Assets, 777 - 780. Assets other than Rolling Stock, 781. Sale of overage or condemned locomotives and wagons, 782. Transfer of assets from open line to Construction, 783. Replaced stock, 784 - 786. Second-hand Rails, 787. Private Railways worked by Indian Railways, 788.

CHAPTER-VIII

INTER RAILWAY AND INTER DEPARTMENTAL SERVICE

Incidence of pay and Allowances

Transfers within the Railways or Offices under the Ministry of Railways, 801. Permanent Transfers to and from other Department/Ministries, 802. Temporary Transfers to and from other Departments/Ministries, 803. Leave and joining Time combined with Transfers, 804. Employment of Armed forces Units, 805 – 806. Army in India Reserve of Officers, 807 – 812. Reservists of Indian Army, 813 – 815. Territorials Army (Non-railway Units), 816 -817. Study Allowances, 818. Compensatory Allowances during leave, 819.

Incidence of Travelling Allowances

Transfers within the Railways or offices under the Ministry of Railways, 820. Permanent Transfers to or from other Departments/Ministries, 821. Temporary Transfers to or from other Departments/Ministries, 822. Attendance at Courts, 823. Journeys on behalf of private bodies, 824. 

Incidence of Leave Salary

Persons exclusively employed in the Ministry of Railways, attached offices of the Ministry of Railways, Zonal Railways, Production Units and other offices subordinate to the Ministry of Railways, 825. Open-line staff employed on constructions, and surveys, 826. Persons in foreign service, 827. Persons with service under different Departments/Ministries and Governments, 828 – 835. Persons transferred from Company-managed Railways, 836. 

Incidence of Pensions
 

Ordinary Pension, 837. Calculation of Length of Service, 838 – 839. Pension for a deficiency in Service, 840. Special Pensionary Concessions granted by another Government, 841. Pension for Military Service, 842. Wounded and injury Pensions, 843. Adjustment of Pensionary Charges, 844. Commuted Pensions, 845.

Incidence of Gratuity and Contributions to Provident Fund.
 

Gratuity and special contribution to Provident Fund, 846 – 849. Contribution to Provident Fund, 850 -855. Incidence of the cost of Railway Police, 856 – 866. Other Inter Railway Adjustments, 867. Apportionment of Earnings, 868. Working Expenses, 869. Miscellaneous, 870.
 

CHAPTER-IX

STATUTORY AUDIT
 

Comptroller and Auditor-General of India, 901-908. Railway Accounts Separation from Audit, 909. Director of Railway Audit, 910 - 915. Communications from Audit, 916. Disposal of Audit Objections, 917. Audit Notes and Inspection Reports, 918. Replies to Inspection Reports, 919. Disagreement between the Accounts Officer and the Principal Director of Audit, 920. Audit Objections and Provisional Payments, 921. Rectification of mistakes in Accounts disclosed by Audit, 922. Audit Report-Railways, 923-928. Internal Audit, 929-932. 

CHAPTER-X

PETTY CONTINGENT EXPENSES CASH IMPREST

Nature of Contingent charges, 1001- 1003. Classification of contingent charges, 1004. Special contingencies, 1005. Liveries and warm Clothing, 1006 -1007. Conveyance hire, 1008 – 1009. Ordinary Contingencies, 1010. Postal Charges, 1012. Stationery and Printing Stores (including Rubber Stamps), 1016 – 1019. Type writers, Calculating Machines, etc., 1023. Service Contracts, 1027–1028. Other Stores, 1029. Official Publications, 1033 - 1035. Non-official Publications, 1036 - 1039. Recurring Charges, 1040 - 1042. Bills for Contingent Expenditure, 1044. Vouchers of Contingent Expenditure, 1045. Duties of Drawing Officer, 1046. Disbursement of contingent charges, 1047 - 1049. Cash Imprests, 1050 - 1055. Imprest card, 1056.
 

CHAPTER-XI 

REPORTING AND INVESTIGATION OF LOSS OF CASH, STORES OR OTHER RAILWAY PROPERTY. 

Losses, frauds and Embezzlements.

Responsibility for Losses, 1101. Report of Losses, 1102 - 1103. Losses involving the Reserve Bank, 1104. Investigation of Losses, 1105. Legal Advice, 1106. Laxity of Control, 1107. Recoveries of Losses, 1108-1110. With holding of Pension and Provident Fund Bonus, 1111 – 1112. Police Investigation, 1113-1114. Prosecution, 1115-1116. Witness, 1117. Appeal against Acquittals, 1118. Reports to the General Manager, 1119-1120. Departmental Inquiries, 1121-1124.

Appendices

Appendix-I - Deleted Paras

Appendix-II - Code Revision Team

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