More reports on: Economy - general

Railway Budget to be merged with Union Budget from next year

13 August 2016

The government has decided to do away with the practice of presenting a separate Railway Budget from next fiscal year, ending a practice that started in 1924.

It is believed that the ministry of finance has agreed to the suggestions of NITI Ayog member Bibek Debroy in this regard, and will not present a separate Railway Budget in 2017.

A Times of India report quoted sources as saying that the finance ministry has constituted a five-member committee of officers to work out the modalities to incorporate it in the Union Budget.

The move is significant as political heavyweights, especially in coalition governments after 1996, have used the Rail Budget to hand out goodies and for their own political gains and image building.

Once the Rail Budget is merged with the General Budget, the Indian Railways will be like any other government department that receives budgetary support from the finance ministry.

On Tuesday, Railway Minister Suresh Prabhu had told the Rajya Sabha that the Rail Budget should be merged with the General Budget for the long-term interest of national transporter as well as the country's economy.

Prabhu said that he had written to finance minister Arun Jaitley in this regard.

 ''As far as Railway Budget is concerned ... I have written a letter personally to the finance minister saying we are willing for merger (of Railway Budget with the General Budget). In fact, I had suggested even last year. So it's not that I want to just present a budget. I am looking at a national interest,'' he said.

The merger should happen in such a way that Indian Railways become a part of the overall budget and the capital expenditure, revenue deficit and other aspects can be taken care of, Prabhu said.

Indian Railways has the potential to contribute around 2-2.5 per cent of the GDP but for that it needs investment, he said, adding that the national transporter requires huge investment for its survival as the department has the burden of the 7th Pay Commission awards of about Rs30,000-40,000 crore alone, being the largest employer, in addition to the subsidy burden of Rs34,000 crore.

Indian Railways has one of the largest railway networks of the world and is the largest employer in the country. Every year, a Rail Budget, separate from the Union Budget is presented in parliament a couple of days before the General Budget.

A separate budget for the railways started in 1924. Indian Railways was considered a great asset of that time so a separate budget made sense, but as the Indian economy grew exponentially, the Rail Budget seemed quite smaller than the main budget. But the government has not yet abolished the separate budget for Indian Railways.

Critics have questioned the relevancy of a separate Rail Budget as it has a very small expenditure as compared to the General Budget.

Indian Railways runs 13,000 trains per day on 63,000 kilometres of track and carries 23 million passengers a year, equivalent to the population of Australia.


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