New Delhi: Expressing concerns over the financial position of Railways, the Comptroller and Auditor General (CAG) has recommended rationalising of freight and passenger tariffs to improve its finances.

The premier auditing body also pressed for making quick decisions about unviable projects and increasing focus on more viable projects.

"The way forward for Indian Railways to improve its finances is to rationalise both freight and passenger tariffs through some form of pre-determined non discretionary inflation indexing," the CAG said in its 2010-11 report tabled in Parliament on Friday.

Holding that the surplus of just Rs 75 lakh during 2009-10 reflected an impending financial crisis, it also suggested increasing market share in bulk freight where Railways has an inherent competitive advantage.

"Efforts are required to enhance capacity in such a way that the growing demands are satisfactorily met," it said, adding that the public transporter may consider approaching the Government for crediting dividend paid it to a non-lapsable fund to be used for financing network augmentation projects.

The Railways further needs to review all cases of licencing and renting of its assets for timely revision and raising of bills, it said.

The CAG observed that preliminary works were delayed for years. Delay in preparation of detailed estimates and sanction thereof and land acquisition were the problem areas in most of the projects.

Criticising the Railways for not having a proper fund allotment procedure, it said that investment schedules were not prepared leading to improper fund allotment.

Blaming the Railways for the inordinate delay, it noted that inadequate coordination with state governments and the Environment Ministry for availability of site and clearance of forest land contributed to huge time and cost overruns.

Besides a number of contracts were terminated due to insufficient planning on account of drawings not being made available and change in scope of works, it said.

The Railways take up projects for construction of new lines at regular intervals on socio economic grounds to provide rail connectivity to backward and remote areas in the country.

These socially desirable projects though financially inviable and involving a huge outlay of expenditure have been in a state of incompleteness since many decades.