LAHORE: The gap between income and expenditure of the Pakistan Railways during the last financial year to June this year widened to just below Rs27bn, up by 8pc from the previous year’s deficit of Rs25bn, in spite of a surge of 13pc in its earnings from Rs31.92bn to Rs35.97bn.

The major increase of 28pc in railways expense is classified as “other revenue expenditure”. The general administration expenditure has also risen by 18pc owing to rise in pay and pension.

Overall the company’s expense has gone up by 10.5pc from Rs57bn to Rs62.91bn, well below the increase in its earnings, according to the monthly financial position of the railway sent by its financial advisor & chief accounts officer to the ministry recently.

The rising gap between earnings and expenditure shows that the cash-starved railway has failed to control its expense in complete disregard of its fragile financial health.

The reasons behind improvement in the earnings were better service delivery and higher number of passengers and freight trains while expenses increased primarily owing to more spending in non-development sectors.

The earning figures have no mention of the money in suspense account -- an account in the general ledger in which the amount is temporarily recorded.

The expense figures do not include interest on foreign loans and the Rs40bn over draft drawn from the State Bank of Pakistan, appropriation to depreciation reserve fund besides repayment of foreign loans on replacement and capital accounts.

Improvement and welfare besides other revenue expenditures constituted a major chunk of spending with the former increasing from Rs65mn in 2014-15 to Rs74mn in 2015-16 and the latter from Rs16.83bn to Rs21.54bn.

The general administration cost has gone up from Rs7.28bn to Rs8.62bn.

The operating expenses decreased from Rs18.76bn to Rs18.28bn while repair and maintenance spending increased from Rs14.08bn to Rs14.39bn, said the letter.

There has been improvement in the Pakistan Railways balance sheet as it took Rs6bn less overdraft from the SBP last fiscal compared with the previous year.

Since 2011, the PR has been getting annually Rs40bn overdraft from the SBP which remained Rs34bn till the last day of the last fiscal year.

Owing to improvement in trains punctuality and reduction in fares, the number of passengers has crossed 10 million on the railways network while the number of freight trains has gone up from 182 to 2,920 annually.

Published in Dawn, August 13th, 2016