Indian Railways Adopts Accrual Accounting, Sets Benchmark for Financial Transparency

Indian Railways has transitioned to an accrual-based accounting system, enhancing financial transparency and aiding resource mobilization from agencies like the World Bank. This initiative, put forth by ICAI, aligns Indian Railways with international standards and reflects sustainability in financial statements, marking a pioneering step in Indian governance.

Indian Railways has made a significant shift to an accrual-based accounting system, a decision poised to improve financial transparency and facilitate easier resource mobilization from international and green financing bodies. This transition is now implemented across all 26 zones of Indian Railways, for the fiscal year 2023-24.

According to Ranjeet Kumar Agarwal, President of the ICAI, this move not only enhances budget management but also eases the process of securing funds from entities like the World Bank, encouraging better accounting practices. Indian Railways aligns itself with developed economies' government entities, potentially inspiring other Indian government organizations to follow suit.

The ICAI and its Accounting Research Foundation were instrumental in driving these reforms, developing a Transaction-Based Accrual Accounting System to support the preparation of financial statements. This marks the first time sustainability initiatives were reflected in Indian Railways' financial statements, heralded as a milestone in Indian governance.

(With inputs from agencies.)