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Railway cost overruns = $16.4 billion = annual salary bill
Delays in completing railway projects resulted in cost overruns of Rs.1.07 lakh crore ($16.4 billion) - equivalent to the yearly salary bill of its three million employees - according to an IndiaSpend analysis of a December 2015 audit report.
 
As of March 2014, the railways needed Rs.1.86 lakh crore ($28.6 billion) to complete these projects, said the report, "Status of ongoing projects in Indian Railways", conducted over five years (2009-14) by the Comptroller and Auditor General of India (CAG).
 
Of 442 incomplete projects - new railway lines, gauge conversion and doubling - only 156 (35 percent) had deadlines, but despite targets, 75 were incomplete after more than 15 years.
 
The combined cost overrun of projects with a budget of more than Rs.150 crore (319 of 442) was Rs.1.01 lakh crore ($15.5 billion); for projects less than Rs.150 crore (123 of 442), the combined cost overrun was Rs.5,614 crore ($0.89 billion), the report said.
 
Three projects unfinished after 30 years; 22 not started, although cleared 16 years ago
 
Of the 75 projects incomplete for more than 15 years, three were unfinished after 30 years. Further, 22 projects had not started, although some were cleared up to 16 years ago.
 
Here are two examples:
 
1. An 83.74-km railway line from Nangal Dam in Punjab's Rupnagar district to Talwara in Hoshiarpur district: Cleared 34 years ago, the 43.91-km first phase of the line (from Nangal Dam to Amb Andaura, a town in Himachal Pradesh) was completed after nine years, in 1991. The 17-km second phase, from Una in Himachal Pradesh to Charuru Takrala, a village in Una district, started in 1998 and opened seven years later. There has been no construction since, because no money was available. Until March 2014, Rs.383.89 crore had been spent on 46-km and 45 percent of the line is incomplete, the CAG report said.
 
2. A 42-km railway line from Howrah, West Bengal, to Amta in the same state, with a 32-km branch line to Champadanga, a town in Hooghly district: Cleared for construction 45 years ago, the first stretch of 24 km from Howrah to Bargachhia took nine years; the second 18-km stretch, from Bargachhia to Amta, was stalled for several years. Construction restarted in two phases, in 2000 and 2004, but was never completed because land could not be acquired between Bargachhia to Champadanga. In 2014, the railways wanted the project cancelled. But it is presently considered "ongoing", with an anticipated "throw forward" cost - meaning the money required for completion - of 
Rs.356 crore.
 
These are extreme examples, but they reveal how projects are started without clear plans and preparations; many fail the railways' own financial standards.
 
Only 30 percent of projects meet financial requirements, rest are unviable
 
A provision of the Indian Railway Finance Code states: "No fresh investment proposal would be considered financially justifiable unless the net gain (rate of return) expected to be realised as a result of the proposed outlay, after meeting the working expenses or the average annual cost of service, is 14 percent or more".
 
The rate of return is based on the earnings from anticipated traffic. Only 30 percent of the incomplete projects had a net gain or rate of return of 14 percent, whereas 126 projects had a negative rate of return. This means 70 percent of the projects were not financially viable.
 
The CAG report included recommendations for future projects. Some of them:
 
Indian Railways need to revisit all projects that are incomplete after more than 15 years and assess their financial viability.
 
Indian Railways need to prioritise projects and ensure these are adequately funded, so they can be completed on deadline.
 
The Railway Board and zonal offices need to monitor projects better, so no more money is wasted.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Param

1 year ago

waiting 15 years to decide on viability is certainly a new record, even for infra projects :)

Your iPhone will expire in three years, says Apple
New York : US electronic giant Apple has said the iPhones have a life expectancy of three years and so does the Apple watch while AppleTV devices expire in four years.
 
In a recent update to its environmental policy, Apple addressed the question of how long an Apple device is expected to remain in use.
 
According to a report on Forbes.com, iPhone's productive life cycle will be up at the three-year mark, as will the Apple Watch while your OS X -- a series of operating systems developed and marketed by Apple Inc. -- and AppleTV devices will get an extra twelve months to reach the four-year mark.
 
"To model customer use, we measure the power consumed by a product while it is running in a simulated scenario," Apple was quoted as saying.
 
"Daily usage patterns are specific to each product and are a mixture of actual and modelled customer-use data. Years of use, which are based on first owners, are assumed to be four years for OS X and tvOS devices and three years for iOS and watchOS devices," the company added.
 
These numbers are in harmony with Apple's strategy of rolling out operating system updates to older devices and the hardware offered to replace older units.
 
For example, the recently launched iPhone SE, which is designed similar to iPhone 5S, can be upgraded from new iOS 9 to the next three years of iOS updates -- something the iPhone 5S would be unable to do.
 
The time-scale between the release of the 5S and the SE is just inside that three-year window.
 
However, Apple does provide compatibility of its operating systems to older hardware.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Stressed assets to reach Rs.10 lakh crore in 2015-16 Q4: Assocham
New Delhi : Industry body Assocham on Sunday said that the slowdown in steel, textiles, aluminium and others coupled by ongoing Asset Quality Review (AQR) is likely to push banks' stressed assets to Rs.10 lakh crore mark in the fourth quarter of 2015-16.
 
"At the end of December (2015), the total stressed assets (Gross NPA plus restructured assets) of all the banks were at Rs.8 lakh crore which is expected to see a significant jump in the current quarter itself," said a study by the industry body.
 
It said total stressed assets of banks rose four-fold to Rs.7.40 lakh crore by the end of March 2015 from Rs.2.33 lakh crore as of March 2011.
 
Some reasons attributed to the bad assets spike include Indian central bank's AQR and other factors.
 
Assocham noted that in nine months from April to December 2015, gross non-performing assets (NPA) rose by Rs.1 lakh crore from Rs.2,98,641 crore to Rs.4,01,590 crore.
 
"Gross NPAs of state-run banks increased from Rs.2,67,065 lakh crore in March 2015 to Rs. 3,61,731 lakh crore in December 2015. In contrast, the private sector banks' gross NPA rose to Rs.39,859 crore at the end of December from Rs.31,576 crore at the end of March 2015," said an Assocham statement.
 
In percentage terms, gross NPA ratio of public sector banks shot up from 5.43 percent in March 2015 to 7.30 percent by December 2015, the study said.
 
"The fact that banks are expecting subdued last quarter numbers due to mounting bad loans was evident from their advance tax deposits. State Bank of India paid an advance tax of Rs.690 crore as against Rs.1,749 crore deposited in the March quarter last fiscal, a decline of about 60 percent," the study added.
 
Assocham highlighted that mounting loans have made 11 PSBs report losses of Rs.12,867 crore in Q3 of 2015-16.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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