Budget for Medical Foundation

Course Officers
Hemant Godbole, IRAS,
Sr. Professor
(Financial Management)

National Academy for Indian Railways

Vadodara, 390004
1

Salient Features of Indian

Railways
Department of Government of India (GoI).
Unlike most other Departments, it is
Commercial in nature.
It is in the business of transportation where
value is created for the customers who avail of
such services.

Separation Convention

Pursuant to the recommendations of the

Acworth Committee (1920-21), Railway
Finances were separated in 1924 from

General Finances, primarily

to secure stability for civil estimates by
providing for an assured contribution from
Railway Revenues and also
to introduce flexibility in the administration
of Railway Finances.
Railway Budget was thus separated from 1924
3

Consequent to the
Convention

Amount invested by GoI in Railways is

treated as Loan Capital (called Capital at
charge) for the use of which Railways to pay
dividends (actually interest; current rate 5 %)
to GOI. Additional loan received every year is
called Budgetary Support
The Financial Commissioner (FC, who is a
member of the Railway Board) would be a
representative of MoF on Railways.
FC heads the of Accounts Department of IR
4

Railway Budget is a part of General

Budget
Para 301 F-I

Though the Railway Budget is

separately presented to Parliament,
the figures relating to the receipts
and expenditure of the Railways are
also shown in the General Budget
(Para 301 Finance Code Vol. I)

Relationship of Railway Budget

with General Budget
Income from Railways is shown as non-tax
revenue by GoI and expenditure of Railways
is a part of GoIs expenditure.
Railway being Govt. Department, all
provisions of the Constitution of India which
are applicable to General Budget are also
applicable to Railways.

.Contd
Receipts of the Railways (freight, fares etc.) are
deposited with the Consolidated Fund of India
(CFI) and expenditure on the Railways also
comes out of
CFI, after authorization by
Parliament. Consolidation takes place in RBI.

Expenditure can be incurred only after passing

of the budget (or vote on account) and passing
of Appropriation Act.
.

.Contd
Expenditure is divided into voted and
charged. Charged expenditure is for
independent constitutional functionaries
like C&AG and for decrees of the courts,
awards of tribunals etc.
Charged expenditure is directly sanctioned by
the President, other expenditure requires
Parliaments vote
Rationale of Charged Expenditure:
This is done for preserving the
independence t of such institutions /
8
functionaries

Capital and Revenue

Expenditure
For the expenditure on the Railways, there is a
provision of 16 different Demands for Grants to be made
on the Parliament through the Budget
Demand No. 1 to 15 are for Revenue Expenditure and
Demand no. 16 is for the Capital Expenditure (CAPEX).
Revenue Expenditure is typically financed from
Revenue Earnings, while CAPEX is financed partly from
loan from the GoI. and partly from provisions / internal
savings of the Railways (like DRF, DF, Capital Fund).

Contd..
CAPEX under Demand No. 16 is Railways
Annual Plan. This is a subset of GOIs. Annual Plan
as a part of GOIs Five Year Plan.
Expenditure under Demand No. 16 is thus an
outlay over various Plan Heads like new lines,
doubling, electrification, passenger amenities, rolling
stock etc.

10

Demands for Grants and concept of

Primary Units

Railways make various Demands on

Parliament, requesting them for grants
Details of various Revenue Demands
are given in next slide.
While Demands denote activities,
Primary Units give objects of
expenditure into which each activity is
broken down.
Details are given in subsequent
slides.
11

From Finance Code Vol. II

12

Primary Units
(Objects of Expenditure)
01
02
03
04
05
06
08
09
10
11

Salaries and Wages

Dearness Pay and Dearness Allowance
Productivity Linked Bonus
House Rent allowances
Compensatory (City) Allowances
Interim Relief
Railways contribution to NPS
Wages of Casual Labour
Kilometre allowance
Overtime allowance
13

Primary Units--contd
12
13
14
15
16
17
18
19
20
21

Night duty allowances

Other allowances
Fees and honoraria
Transfer allowance
Travelling expenses
Air Travel Expenses sanctioned in lieu of
privilege passes
Office expenses
Rental for P&T telephone and call charges
including Trunk calls
Leave Encashment During the service
Advertising expenses
14

Primary Units--contd
22 Utilities
23 Rental for office equipment(other than Data
Processing)
24 Printing and stationery including Publications
25 Children Education Allowance
27 Cost of materials from stock
28 Cost of materials-Direct purchase
32 Contractual payments
33 Transfer of debits

15

Primary Units--contd
36 Excise duty paid/payable for purchase of
materials
37 Customs duty paid/payable for purchase of
materials.
38 Sales Tax paid/payable for purchase of
materials.
39 Air Travel (Domestic)
40 Air Travel (Foreign)
99 Other expenses.

16

Role of Medical
Department

Ensuring wellness of all railway employees

and
their
family
members
through
preventive
and
curative
interventions
(technological and human) to facilitate better
performance for IR.

17

Revenue Demand for Medical

Department: Demand # 11

Details of what sub-activities this

demand covers and the related
costs, are given in a following
slides

18

CLASSIFICATION OF REVENUE EXPENDITURE

App.1
Demand No.11 Abstract J (Staff welfare and Amenities)
Minor Heads
200 Medical Services

Sub-Heads
Detailed Heads
210
Control
and 211 Officers
superintendence
at HQs and
Divisions.
213
Office
establishments.
214 Other medical and
nursing staf
215
Contingent
expenses.
220
Hospital
and 221 Diet charges.
Dispensaries
excluding Cost of
Medicines.
222 Cost of artificial
limbs appliance, braces,
calipers,
orthopedic
"shoe" etc.
223
Accident
Relief
Medical equipment.
19

CLASSIFICATION OF REVENUE EXPENDITURE

Demand No.11 Abstract J

Minor Heads
200 Medical Services

App.1

Sub-Heads
Detailed Heads
230 Cost of Medicines. 231
Cost
Medicines.

of

232
Cost
of
Surgical
instruments
and
appliances etc.
240 Reimbursement of 241 payment of
Medical expenses and non-Railway
miscellaneous.
institutions
for
treatment,
and
assistance to other
Medical
Institutions.
243 Cost of T. B.
treatment
in
sanatoria.
245
Other
expenses.
20

CLASSIFICATION OF REVENUE EXPENDITURE

Demand No.11 Abstract J

Minor Heads
200 Medical
Services

App.1

Sub-Heads
Detailed Heads
240 Reimbursement of 245
Other
Medical expenses and expenses.
miscellaneous.
250 Public Health.

251 Staf.

252 Medicine-Cost
thereof and freight
charges.
260
Maintenance
of 261 Repairs and
equipmentsMedical servicing charges of
Department.
diferent
equipments viz. XRay, E. C. G., etc.
including cost of
sharpening,
polishing of surgical
instruments.
21

CLASSIFICATION OF REVENUE EXPENDITURE

Demand No.11 Abstract J
Minor Heads

Sub-Heads

App.1

Detailed Heads

Repairs
200 Medical Services 260 Maintenance of 262
equipments- Medical Maintenance
Department.
Ambulances.

300
Health
Welfare services

and 310
Sanitation
Railway Colonies

and
of

263
Hospital
furniture.
in 311 Sanitary staf.
312 Sanitary stores.

313
Contingent
expenses.
22

CLASSIFICATION OF REVENUE EXPENDITURE

Demand No.11 Abstract J
Minor Heads
Sub-Heads
300
Health
and 310
Sanitation
Welfare services
Railway Colonies

App.1

Detailed Heads
in 314
Payment
to
Conservancy
Contractors
and
Municipalities.
315
Maintenance
and repairs to Motor
trucks(Refuse/Night
soil
Lorries
and
Carts)
316 Lighting (other
than
Electric)
in
Railway
Colonies
and areas.
317 Other expenses.

23

CLASSIFICATION OF REVENUE EXPENDITURE

Demand No.11 Abstract J
Minor Heads
300 Health
and Welfare
services

Sub-Heads

App.1

Detailed Heads
Preventive Health Measures and
Pest Control

350
Other 351 Malaria, Filaria and Pest
Welfare
control staf
services.
353 Cost of Malaria, FiIaria and
Pest control stores.
354 Cost of Prophylactic Lymph
Sera
Vaccines,
anti-lexine,
Loxorus
including
eentinalicntinalic vaccine etc.
355 Examination of, Food and
Water
samples
in
State
Laboratories.
356 Other expenses.
24

CLASSIFICATION OF REVENUE EXPENDITURE

App.1
EXPLANTORY NOTES Abstract `J
J.21 This head will also record Non-Practising allowance to
1
Doctors under Primary Unit 13.
Contingent Expenses will include all expenditure incidental
J.21 to the upkeep of the office such as stationery, forms,
5
printing charges, books, publications, uniforms, clothing to
class IV staf, departmental advertising charges, cost of
repairs and maintenance of typewriters and accounting
machines etc., rental for office equipment (other than data
processing), conveyance hire to staf at Headquarters or
outstations, taxi hire to officers, rental for P &T telephones
and call charges including trunk calls, water, electric light
and power expenditure, and miscellaneous other charges.
In respect of Medical Department cost of dressing material,
laboratory sera and laboratory antigens, X-ray films, X-ray
contrast media and dyes, dispensing appliances anesthetic
instruments and appliances including nursing appliances,
orthopedic instruments and appliances general and special
surgical instruments and appliances, physiotherapy and
25
occupational therapy equipment will also be recorded
under

CLASSIFICATION OF REVENUE EXPENDITURE

EXPLANTORY NOTES Abstract `J
J. 231,232

The
contingent
expenses
for
Medical
Department to up keep the office and the
instruments and appliances etc. will continue to
be booked under existing detailed heads viz. J215 & J-313.

J.313
Details are exactly as given for J. 215, as
applicable to this activity, viz
sanitation in
Railway Colonies

26

CLASSIFICATION OF REVENUE EXPENDITURE

EXPLANTORY NOTES Abstract `J
J. 221
J.223

J.230

J.241

Will bear diet charges for Railway staf, indigent

passengers, trespassers and employees injured in
accidents who are entitled to free diet under existing
orders.
Represents cost of articles required for equipping
medical vehicles attached to relief trains according to
the prescribed scale.
Will record cost and carriage of medicines including
blood therapeutic sera, anti-toxins, medical oxygen,
nitrous oxide cyclopropane, holthane etc. and dental
drugs, including packing charges.
Will also record the expenditure connected with the
reimbursement of medical expenses of Railway
employees and their families entitled to treatment free
of charge, as well as the amount of contribution paid by
the Railway to non-Railway Hospitals as well as charges
on account of the cost of school of Tropical Medicines
27
and Hygiene, Calcutta.

CLASSIFICATION OF REVENUE EXPENDITURE

EXPLANTORY NOTES Abstract `J
J.245
J.261

J.550

Will record miscellaneous expenditure e.g., fees

for attending medical boards as members and
such charges as are not included under any
detailed heads under J. 200.
Will also include maintenance of other electrical
equipment in Hospitals and Health units.
Welfare buildings will include hospitals, health
units, dispensaries etc.

Links:
http://www.indianrailways.gov.in/railwayboa
rd/uploads/codesmanual/FINANCECODE/abstract
http://indianrailways.gov.in/railwayboard/uploa
_j.htm
ds/codesmanual/FINANCECODE/appn-2.htm
http://www.indianrailways.gov.in/railwayboard/
uploads/codesmanual/FINANCECODE/abstract_z
.htm
28

Preparation of Budget
Responsibility for framing the Estimates.- Preparation
of the Revised and Budget Estimates commences at the
'grass root level , i.e., Division, Workshop, Stores
Depot etc., as the case may be.
The entire
responsibility for framing the estimates devolves upon
the spending / earning authorities concerned, though
the actual work of compilation and scrutiny is with the
FA&CAO

29

Presentation and passing

of Budget

Presented to Parliament for voted

portion
For charged portion President
approves appropriation from CFI
Appropriation Bill and Act
Budget Grants

30

Budgetary Control and

Review Process

Control
over
expenditure
including
exchequer control
For Revenue/ Works grants,
Reviews Monthly, August, Revised , Final
Modification and telegraphic modifications
Supplementary Grants,
Re-appropriation
Appropriation Accounts and Audit certificate
thereon-Reviewed
by
Public
Accounts
Committee (Parliamentary Control)
31

Capital Budget

Construction
of new
hospital
buildings/expansion
of
existing
buildings etc. (Coordinated by Principal
Chief Engineer)
Machinery and Plant Programme (M&P)
on replacement account and additional
account Equipments & Vehicles etc.
(Coordinated by CME)
GMs powers (Ann.II to para 505 of
Finance Code Vol. I)
32

Important Source of Funds for

Capital expenditure
Internal generation
Depreciation Reserve Fund
Development Fund
Capital Fund

33

Important Source of Funds

Capital expenditure
contd.

External Sources
Capital at Charge
Extra budgetary Sources
Market borrowings through IRFC to
finance RSP, M&P items.
PPP for major projects
National Rail Vikas Yojana projects
through RVNL
34

Plan Heads

(Finance Code Vol. II)

Plan Name
Head
s

Plan
Head
s

Name

11

New Lines

12

Purchase of
new lines

13

Restoration of
dismantled lines

14

Gauge
conversion

15

Doubling

16

Traffic
facilities, yard
remodelling
35

Capital Plan Heads --contd

Plan Name
Head
s
17
Computerization
21

Rolling stock

30

Road Safety
works-Road

Plan Name
Head
s
18
Railway
Research
29
Road
Safety
Works-level
crossing
31
Track
renewals
36

Capital Plan Heads --contd

32 Bridge works
34 Taking over line
wires from P&T
dept
36
37

Other electr. excl

TRD
Traction Distribution

42 Workshops
incl.Prod.units

33 Signaling and
Telecomm works
35 Electrification
projects
41 Machinery and
Plant
51 Staff quarters
37

Capital Plan Heads

---contd
52

Amenities for staff

53

Passengers
amenities

62

Investments in
Govt. Comm.
Undertaking

64

Other Specified
Works

71

Stores Suspense

72

Manufacture
Suspense

73

Miscellaneous
advances

81

Metropolitan
Transport projects

38

Primary Units (Objects) Expenditure for

Works
1
2
3

Pay& allowances of
Departmental Establishment
Payment to Casual Labour

01

Payment to contractors and

others for Engineering works or
supply and erection contracts
etc.
Direct supply of material

03

02

39

04

Primary
Units(Objects)Expenditure for
Works---contd
5 Stores supplied from stock

05

6 Freight on stores

06

7 Credits for released

material

07

8 Others

08

9 Transfer of debits/credits
affecting capital works
expenditure/suspense
accounts

09

40

Primary Units(Objects)Expenditure
for Works--contd
10

Productivity Linked Bonus

10

11

Excise duty paid/payable for

purchase of materials

11

12
13
14
15
16
17

Customs Duty

Sales Tax

Interim Relief
Travelling Expenses
Air Travel(Domestic)
Air Travel(Foreign)

12
13
14
15
16
17
41

Revenue Budget for Medical

Department within Demand #11:
2015-16 (Rs Cr.)
200Medical services 2477
310 Sanitation in colony 592
350 Other welfare services 16
--------Total
3085
Ref: Pl. see Demand No. 11 in Railway Budget
2015-16 at pages 11.02.1 and 11.02.2 with
following link
(http://www.indianrailways.gov.in/railwayboard/upload
s/directorate/finance_budget/Budget_2015-16/DB1_2015-16.pdf)

42

Issues for Discussion

Permitting private persons to avail

railway services and use our idle asset
capacity and earn additional revenue?
(in-sourcing)
Outsourcing some of the activities (if
viable)
How to use outside expertise publicprivate partnerships?
43

Road Ahead

Best utilization of human resources,

machines and materials
Competitive Life cycle cost for machines
and materials
Simplification of procedures, use of
technology for better effectiveness less
cost
Planning for assets and their maintenance
Prudent investment for capacity
de-bottlenecking/expansion
with
justification
44

Road Ahead contd.

Critical examination of each item of

expenditure to reduce it to the extent
possible without affecting quality of
service
Adopting zero base budgeting system,
substitution / value engineering
Preventive ~ curative trade off
Adopting
performance
budgeting
system
45

Conclusion
Budgeting is a managerial tool
which helps management achieve
targets assigned to them by
planning for commensurate
availability of money.
So it is necessary to frame and use
the budget judiciously.
46

Thank You

47