Indian Railways shows red flag to unauthorised expenses

Expressing serious concern over the increasing instances of unauthorised expenditure running to thousands of crores of rupees, the Indian Railways has called for urgent measures to enforce financial discipline in the system.

The Railway Board has directed General Managers of all Zonal Railways, Production Units and others to initiate effective measures to curb the practice of incurring unsanctioned expenses in the execution of projects and subsequently getting the same approved by the competent authority.

Pointing out the cases of unauthorised expenditure had increased in the recent past, the note said the Comptroller and Auditor General of India had highlighted the issue in various audit reports and the matter had now been taken up by Public Accounts Committee (PAC) for Review.

Practice lacked financial propriety

“If expenditure is incurred beyond the sanctioned cost and the estimate is put up for approval on post facto basis, scrutiny of estimate by competent authority gets by-passed and only option left is to sanction it as a fait accompli. This practice is against the spirit of financial propriety,” the Railway Board said in a note issued on March 27, 2026.

The Union Government had put various restrictions/limits on the Ministry of Railways for sanctioning estimates in respect of variation, cost etc. The practice of incurring expenditure beyond the sanctioned cost may exceed such restrictions and violate the guidelines of the Ministry of Finance and attract criticism in audit reports.

CAG had repeatedly raised the issue of incurring expenditure beyond the sanctioned cost. Unsanctioned expenditure meant incurring expenditure on unsanctioned scope/items, which was not a judicious decision, the note said.

“As soon as it becomes apparent that the expenditure on a work or project is likely to exceed the amount provided thereof in the detailed estimate or construction estimate, a revised estimate should be prepared and submitted for the sanction of the competent authority,” the Railway Board said, instructing the top officials to put in place a system to ensure that unsanctioned expenditure does not become a norm.

₹9,122 crore unauthorised expense in 2023-24

The latest CAG report said during the fiscal 2023-24, the Ministry of Railways had incurred an unauthorised expenditure of ₹9,122.24 crore involving 1999 cases. In the previous year, it reported that a similar expense to the tune of ₹6,483 crore was reported in 1,932 cases.

Similar audit comments were in the CAG reports for 2018-19 to 2022-23. “We noted that the Ministry of Railways had not reduced the cases of unsanctioned expenditure despite being pointed out in the previous audit reports.”

The railways had spent ₹6,19,837.90 crore against the sanctioned grant of ₹6,47,031.69 crore registering a net saving of ₹27,193.69 crore in 2022-23. The savings indicated that the core activities (operation of passenger and goods trains and generation of revenue from their operations), creation of assets and value addition for which the funds were demanded through Demands for Grants were not done and the desired benefits could not be achieved by the railways.

At the same time, incurring excess expenditure over and above the sanctioned grants indicated unauthorised expenditure which required to be regularised by Parliament, the CAG report said.