Did someone study India’s Lalu Prasad’s accounting magic?

By Citizen Somapala

(February 08, Colombo, Sri Lanka Guardian) Lalu Prasad, India’s former Railway Minister surprised India and many people in the world by his claims of earning a huge profit for Indian Railway. Everyone treated him as a wonder and a magic . He became a celebrity everywhere. And a British University gave him a honorary doctorate.

Now it has all this has been exposed as a bluff, and an accounting fraud. By a simple trick of inflating the accounts, he has presented a monumental success.

His successor, the now Railway Minister Mamata Banerjee had no option but to shatter the media-orchestrated myth of her predecessor Lalu Prasad achieving magical turnaround of the Railways, according to analysts. A report states,

“Had she not exposed Lalu’s jugglery, she herself would have landed in trouble in defending and perpetuating the inflated investible surplus of Rs 46,534 crore contrived during the last five financial years ending March 31, 2009.

In any case, certain enterprising professionals had already partly reported the accountancy changes that helped Lalu presented rosy picture of the Railways’ finances.

Without naming her predecessor and without even using harsh words such as scam, Mamata exposed Lalu’s accounts fudging in the White Paper that she presented to Parliament on December 18.

The White Paper says the Railways made two accounting changes in the 2007-08 rail budget to inflate profitability and the surplus money that can be ploughed back into the Railways for its growth.

It introduced the terms “cash surplus before dividend” and “investible surplus” to inflate profitability and the surplus money that can be ploughed back into the Railways for its growth.

After aligning the accounts in the same manner as were presented prior to the two accounting changes and adjusting for certain other deviations and inadequacies, the cumulative investible surplus for five years reduced from Rs 66,804 crore to Rs 20,269 crore, the Paper shows.”

Perhaps, someone in Sri Lanka may have learned from Lalu school of magic.