More reports on: Railways, Government policies

Niti Aayog panel recommends scrapping of Railway Budget

23 June 2016

The Narendra Modi government may do away with the practice of presenting a separate budget for Indian Railways if it accepts a Niti Aayog recommendation for integration of the Railway Budget with the General Budget.

A panel headed by Niti Aayog member Bibek Debroy is reported to have recommended the scrapping of the Railway Budget since it does not serve any purpose as the Railways has not succeeded in raising resources for investment and remained dependent on the government for investment funds.

The Railway Budget, which has been going on since the days of the British Raj, has become an exercise in futility, according to the report.

The cabinet has sought inputs from the railway ministry on a Niti Aayog note titled Dispensing with the Rail Budget and depending on the ministry's reply, it will be further discussed among other concerned ministries before the government finalises its view, according to reports.

Over the years, successive governments have used the Railway Budget' as a means of dispensing popular measures and have failed to address the "problem of under-investment".
The panel pointed out that as per the Railway Act of 1989, the government can change tariffs without involving Parliament. The scrapping of the budget exercise will, however, lower the stature of the railway ministry.

In the 2016-17 Railway Budget, railway minister Suresh Prabhu made no changes either in passenger fares or freight rates.

He had also announced the introduction of three new super-fast trains and creation of dedicated north-south, east-west and east coast freight corridors by 2019.

It may be noted that the Railway Budget for 2016-17, presented by railway minister Suresh Prabhu focused on capital expenditure and less on new announcements.  The budget estimates capital spending at Rs1,21,000 crore with funds coming from a mix of sources in order to ensure that the projects are given assured funding.

Gross traffic receipts for the coming fiscal was fixed at Rs1,84,000 crore, with passenger earnings growing at 12.4 per cent to Rs51,012 crore and freight traffic adding 50 million tones to achieve earning of around Rs1,17,000 crore.

But, as things stand, there is a huge mismatch between Railways' earnings and expenses forcing it to look to the finance ministry to meet most of its additional expenditure. This, according to Niti Aayog, is no case for a separate budget.

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