About 10 years ago, it was decided by the minds that be that a significant portion of Railways procurement would be decentralized to Railways zones and Production units. The catch for the zones in particular was that suppliers would continue to be approved centrally, primarily by Lucknow-based Research Design & Standards Organization (RDSO). What resulted? The pre-fixed suppliers formed cartels, fixed prices, and fleeced the Railways, as they still do. They go from one zone to another hiking prices in tender bids in every purchase, claiming inflation or market conditions or providing no explanation at all as they are the only game in town given restricted competition. When the same zone would buy the same Railways part a year later, the price they would face from the lowest bidder would sometimes show as much as a 100% increase in a year. Poor CAG, they reported this occurence as best as they could within their limitations in 2006. But, no one in media or parliament even bothered about the resultant losses worth thousands of crores. The theft still continues in Railways in this fashion. This is the CAG report that speaks of this over-pricing in its own characteristically muted way.
CAG - Decentralization of Railway Procurement 2006(5)
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