Indian Railways Faces Rs 573 Crore Financial Irregularities in CAG Audit Report

India’s national auditor Comptroller and Auditor General of India (CAG) has discovered over Rs 573 crore in fiscal lapses and operational inefficiencies across Ministry of Railways, which reveal systemic weakness in recovery process, executing projects and asset management.

As part of the Audit Report numbered 5 in 2025 by the CAG, the findings were tables on Lok Sabha on Monday, July 21 during ongoing Parliament Monsoon Session.

Earlier the report, which was laid in the Rajya Sabha on 4 April, covered 25 pertinent observations basis the test audits conducted up to FY23, with updates from subsequent periods where applicable.

These findings come even as Indian Railways pushes for greater efficiency, private investment, and large-scale infrastructure modernisation. The CAG's observations highlight persistent challenges in revenue management, contract enforcement, and planning that could undermine the sector’s reform ambitions

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The Comptroller and Auditor General of India, the country’s top audit authority, is presently headed by K. Sanjay Murthy.

What were the key shortfalls in recovering revenue?

As highlighted in the aforementioned report, the biggest lapses were discovered in short recovery of land license fee totalling Rs 148.61 crore by Northern Railway from five government-aided schools, cause of non-adherence to Railway Board Directives.

Meanwhile, another significant dip point was involving the failure to recover Rs 55.51 crore in contributions to District Mineral Foundations (DMF) from contractors involved in mining-linked activities, despite collective royalty amounts.

On the other hand, East Central Railway incurred a revenue loss of Rs 50.77 crore by failing to impose shunting fee at Bina siding (BCSK). Similarly, South Central and Northeast Frontier Railways failed to realise Rs 25.48 crore for deposit works.

Southwestern Railway constructed a Road Over Bridge that remains unused for over five years due to lack of coordination with the Karnataka government, blocking Rs 11.81 crore. The non-commissioning of a loco trip shed in New Jalpaiguri tied up another Rs 9.33 crore, while poor planning of a terminal station in New Garia resulted in infructuous expenditure of Rs 7.62 crore.

Among several other loss incurring instances, the report also spotlighted an ineligible freight concession of Rs 11.02 crore granted by Southern Railway under the Station-to-Station Rates (STS) scheme. Procurement irregularities and failure to consult relevant technical bodies led to additional costs and underused rolling stock.