Southern Railway’s Freight Concession Losses Highlight Operational Oversights

One of the critical areas that contributed to these losses was the granting of an ineligible concession on freight charges for the transportation of motor vehicles.

The audit revealed that Southern Railway had erroneously extended a 6% freight concession to a firm transporting vehicles to northeastern states. These vehicles were moved using specially designed Bogie Covered Autorake Double Decker Wagon (BCACBM) rakes, rather than the Newly Modified Goods (NMG) rakes for which the incentive was originally intended. This concession, meant only for NMG rakes, led to a loss of ₹9.25 crore for Southern Railway.

The Ministry of Railways initially introduced these freight concessions to incentivize transportation to the northeastern states, thereby boosting economic activity in these regions. However, the extension of this concession to BCACBM rakes, which was not covered under the incentive scheme, underscored a misapplication of policy, leading to a significant financial hit.

A senior official from Southern Railway emphasized that the freight booking process is highly automated, relying on the Freight Operations Information System (FOIS) for managing bookings and granting concessions. This online mechanism minimizes manual intervention, suggesting that the error in granting the concession likely stemmed from a systemic oversight rather than any deliberate manual manipulation. The official also noted that since the process is automated, the Southern Railway’s zonal offices had no role in offering the concession or recovering the financial loss. Responsibility for rectifying this oversight and initiating any corrective measures lies with the Railway Board.

The Southern Railway’s experience serves as a cautionary tale for other railway zones and freight operators. As India seeks to modernize its logistics infrastructure and expand freight capabilities, particularly in underserved regions, ensuring that automated systems are error-free becomes crucial. Any misstep, such as this concession error, not only results in financial losses but also raises concerns over the operational efficiency of automated systems like FOIS, which are at the heart of India’s freight modernization initiatives.

Moreover, as the Indian Railways pushes towards adopting modern technologies for optimizing freight operations, it is essential that policies and concession frameworks are precisely applied to prevent similar lapses. This incident also highlights the need for regular audits of automated systems to ensure they comply with the policies set by the Railway Board.

While freight concessions serve as a powerful tool for promoting the movement of goods to less accessible regions, any misapplication, such as the case with Southern Railway, can negate these benefits by incurring significant financial losses. To safeguard against future occurrences, greater coordination between zonal railways and the Railway Board, along with enhanced system checks, is necessary to ensure that freight incentives are granted accurately, ultimately contributing to a more robust and efficient logistics ecosystem.