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Railway Scrap Trade: Mafia Out, Transparency In

New Delhi, Feb 13: [PTI]
Doing away with past practices, railways has made e-auction mandatory for scrap auction as part of the Digital India initiative even as it made over Rs 3,000 crore from such sales in last fiscal. ”We have switched over to 100 per cent e-auction for sale of scrap. The e-auction has fetched above Rs 3,000 crore revenue in 2014-15,” said a senior Railway Ministry official.

E-auction has enabled prospective scrap purchasers to bid simultaneously on an all-India basis with digital e-payment facility. Before making the e-auction mandatory, a pilot project was commissioned by the Southern Railway to sell scrap via online process. ”Some lacunae were found in the e-auction which were addressed before opting for full-fledged e-auction,” said the official. Railways sells thousands of tonnes of scrap, including about 15,000 wagons, 1,200 coaches, 80 to 100 locomotives, every year through public auction. 

Earlier practice was to sell scrap in open auction in the presence of concerned officials but the role of the mafia could not be ruled out. “After the introduction of e-auction not only the role of the mafia was eliminated but it has also brought complete transparency in the entire scrap trade,” said the official. Encouraged by the response, e-auction is now proposed to be used for leasing of parcels and other commercials contracts also. Railways has also started paperless settlement of tenders by enlarging the scope of e-procurement. As per the new policy, now any procurement above Rs one lakh will be carried through e-procurement system. 

In a move aimed at transparency for the benefit of bidders, Indian Railways had earlier switched over to 100 percent e-auction for the disposal of scrap, thereby eliminating the need for physical presence/physical bidding by purchasers.

Indian Railways disposes scrap worth Rs.3500 crore every year. Till a few years ago, scrap disposal by Indian Railways was being carried out through public auctions requiring physical presence of purchasers for bidding. This e-auction system has been developed in house by the Ministry of Railways. In this auction system, electronic bidding system has been designed to enable participation in auction through internet using digital certificate (DSC) for security. No physical presence of purchaser is required for biding.

Any purchaser can participate in e-auction for scrap lots put up for auction on entire Indian Railway system by getting themselves one time registered on website The e-auction module ensures payment process electronic and smooth for purchasers. No cash handling is required by purchasers and Railway’s cashiers. Bidders participate in the biding process through special arrangement of lien mark instead of any cash transaction. Bidding process is completely transparent widening the reach of the bidder for participation in various auction of different lots through internet from anywhere thus, curtaining the role of middlemen.
Thus, e-auction is saving time and effort both for Railways and bidders, bringing in complete transparency, cost effectiveness and efficiency in disposal of scrap on Indian Railways.