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Railway budget is dead: To be merged with General budget now

Viewsheadlines Desk,

New Delhi. A tradition of close to ninety years is going to end beginning next year. Narendra Modi government has decided in principle to do away with the Railway Budget from the year 2017.

This means that the Union Railway Minister will no longer be able to present the Railway budget as he or she used to do for the last 92 years. To be true, many a times Union Railway budget looked more attractive to many a people than the Union Budget as it impacted almost every person directly on very frequent basis.

Indian Railways is among the biggest rail networks in the world. Run and operated by India’s Union Ministry of Railways, it comprises 115,000 km (71,000 mi) of track over a route of 67,312 km (41,826 mi) and 7,112 stations. To know the extent of its functioning it will be suffice to state that during the year 2014-15, Indian railways carried 8.397 billion passengers annually or more than 23 million passengers a day and 1.05 billion tons of freight in the year.


In term of revenue, it has a budget bigger than the whole budget of many small nations. During the year 2014–2015 Indian Railways had revenues of Rs 1.634 trillion (US$24 billion).

While denouncing the demise of the Railway budgets Finance Minister Arun Jaitley said “From the coming year, the Railway and the General budgets will be amalgamated. There will be only one budget. Secondly, the distinction between plan and non-plan expenditure will be ended from next year. Consequently, there will be only one appropriation bill”. The Finance Minister said over the years, the budget dynamics had undergone a sea change, with some ministries like Defence having more outlays than Railways. “We will also complete the twin-budgetary exercise before March 31,” he said, alluding to the decision to also advance the date of tabling.

It is being said that the decision to merge the two budgets was mooted by Railway Minister Suresh Prabhu and endorsed by official think tank NITI Aayog — which also proposed the doing away of the distinction between plan and non-plan expenditure. The decision on the merger of two budgets will also save Indian Railways Rs 9,700 crore it pays as dividend to the exchequer. Both Jaitley and Prabhu, during the press briefing, said that the distinct identity of the Indian Railways will be maintained — including the freedom to raise resources via extra-budgetary means and fix tariff.

While talking about it further Jaitley said, “Functional autonomy of the Railways will be maintained…The government will also take an initiative to ensure there is a separate discussion on Railways during Budget Session”.

Meanwhile Railway Minister Prabhu said “This is a historic step, matching global benchmark and best. This will help raise capital expenditure in Railways which will enhance connectivity in the country and boost economic growth…Our effort to leverage extra budgetary resources will continue.” The Railways has seen a separate budget since 1924 when the British thought it necessary to focus on India’s most important infrastructure network. The Railways then accounted for 70 per cent of the total budget — now pared down to just 15 per cent, on an average, of the country’s overall budget, the size of which was around $300 billion for this fiscal.

Meanwhile the Indian business leaders have lauded the decision. “Purely from a policy point of view, the cabinet decisions send a clear message that the government is orchestrating big bang reforms in a major way,” said CII Director General Chandrajt Banerjee. “Global and domestic business sentiment would get a further fillip and so would the environment for doing business in the country.” Jaitley also clarified on the proposed new date for budget presentation and said while it will be advanced, the decision will depend on a host of issues, notably state elections.

On the other hand he said that the advancement is to ensure that the Finance Bill is passed in the first half of the Budget session, than spill over to the second half after a month-long recess. Finance Ministry officials said after the abolition of the Planning Commission, the relevance of plan and non-plan expenditure is lost — and a better indicator of productive and general expenditure would be a distinction under the heads of revenue and capital. For long, non-plan expenditure is what the government earmarked for the so-called non-productive areas such as salaries, subsidies, loans and interest, while plan expenditure pertained to the money aside for productive purposes, like various developmental projects of ministries.

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