The Railways Ministry has made yet another new attempt to standardize norms of project costing and viability. Notwithstanding periodic instructions, the Zonal Railways and other field units follow different norms, thereby messing up projects planning. 

This results in sub-optimal or flawed decisions at the final approval stage. The problem ultimately snowballs into cost & time overruns, impacting adversely the Railways’ operating ratio. 

The latest initiative dated 20th March 2023 is the ‘Approach Paper (AP) on Financial Appraisal Framework for Railway Projects’. It has been issued to standardize the norms for calculating the Financial Rate of Return (FIRR). It is incorporated in the detailed project reports (DPRs). 

The instructions, listed in AP, have come into effect from 1st April 2023. These are applicable to four specified types of projects. These are: new line, doubling of track, gauge conversion and traffic facilities.  

As put by AP, the Railway Board (RB) has “observed that different zones have calculated FIRR based on different assumptions and methodology. This inhibited a meaningful and uniform appraisal of the DPRs submitted by the Zonal Railways. Also, constant clarification had to be given to NITI AYOG regarding the different methodologies and assumptions made by the Zonal Railways.”