The Indian Railways has raised serious concerns over the rising instances of unauthorized expenditure amounting to thousands of crores of rupees, prompting urgent calls for stricter financial discipline within the organization. This issue was highlighted following repeated observations by the Comptroller and Auditor General of India (CAG) and has now become a subject of scrutiny by the Public Accounts Committee (PAC).
In an official note dated March 27, 2026, the Railway Board directed all General Managers of Zonal Railways, Production Units, and other departments to implement effective measures to curb the practice of incurring expenses beyond sanctioned limits during project execution. This overspending is often followed by attempts to obtain post-facto approval from competent authorities, a practice the Board described as contrary to the principles of financial propriety.
The note emphasized that when expenditures exceed the sanctioned cost, submitting revised estimates for prior approval is essential. However, in many cases, such scrutiny is bypassed, forcing authorities to sanction expenses retrospectively, effectively treating the excess spending as a fait accompli. This circumvention of financial checks undermines accountability and transparency in project management.
The Union Government has already imposed various restrictions and limits on the Ministry of Railways concerning sanctioning estimates related to cost variations. Exceeding these limits not only violates Ministry of Finance guidelines but also invites adverse remarks in audit reports. The CAG has consistently flagged the issue of unauthorized expenditure in its audit reports over several years, noting that this practice entails spending on unsanctioned scopes or items, which lacks judicious decision-making.
The Railway Board's note reiterates the necessity of preparing and submitting revised estimates as soon as it becomes apparent that project costs will exceed the initially sanctioned amounts. It calls upon senior officials to establish systems that prevent unauthorized expenditure from becoming a routine practice.
Data from the latest CAG report reveals the extent of this financial indiscipline. During the fiscal year 2023-24, the Ministry of Railways incurred unauthorized expenditures totaling ₹9,122.24 crore across 1,999 cases. This represents a significant increase from the previous year's ₹6,483 crore in 1,932 cases. Earlier CAG reports from 2018-19 through 2022-23 also highlighted similar issues, noting that the Ministry had not effectively reduced unauthorized expenditure despite repeated audit observations.
Besides this, the report sheds light on the Ministry's overall financial performance. In the fiscal year 2022-23, the railways spent ₹6,19,837.90 crore against a sanctioned grant of ₹6,47,031.69 crore, resulting in net savings of ₹27,193.69 crore. While this may seem positive at first glance, these savings indicate that certain core activities-such as the operation of passenger and freight trains, asset creation, and value addition-were not fully carried out as planned. Consequently, the anticipated benefits from these funds were not realized.
At the same time, the report points out that excess expenditures beyond the sanctioned grants amount to unauthorized spending, which must be regularized by Parliament. This duality of underspending in some areas and overspending in others reflects inefficiencies and lapses in financial management within the Ministry.
The Railway Board's emphatic call for corrective action underscores the need to enhance financial controls and accountability within Indian Railways. By ensuring that all expenditures are within sanctioned limits and that any necessary revisions receive prior approval, the Ministry aims to foster better governance and compliance with established financial norms.
This development comes at a time when Indian Railways continues to be a vital component of the nation's infrastructure and economy, handling millions of passengers and tonnes of freight daily. Effective financial discipline is crucial not only for maintaining operational efficiency but also for sustaining public trust and ensuring optimal use of public funds.
In summary, the Indian Railways faces a pressing challenge in curbing unauthorized expenditure, which has consistently been highlighted by the CAG and is now under the scrutiny of parliamentary committees. The Railway Board has responded by instructing its senior leadership to enforce stricter financial oversight and to prevent cost overruns from becoming a normalized practice. Addressing these issues is essential for the Railways to maintain fiscal prudence and deliver on its mandate effectively.