Railway Budget: A new track

A 92-year-old tradition ends with the doing away of the railway budget, which is being merged with the general budget. Only the highlights will be presented

vishwas

Vishwas Dass | January 17, 2017 | New Delhi


#Suresh Prabhu   #Budget 2017   #Rail Budget   #Railways   #Indian Railways  
Railway minister Suresh Prabhu and MoS Manoj Sinha with the railway budget, 2016
Railway minister Suresh Prabhu and MoS Manoj Sinha with the railway budget, 2016

This time of the year, the corridors of Rail Bhawan on Delhi’s Raisina Road, would normally have been abuzz with activity as officials would be at work tightening the nuts and bolts of the railway budget. The exercise was so time consuming, officials would have to sometimes go without sleep. The effort was to cover every microscopic detail of new trains, projects and railway lines.

But now, Rail Bhawan mandarins are no longer spending sleepless nights as the union government on September 21 decided to merge the railway budget with the general budget. The finance minister will now present a unified budget, breaking a 92-year-old tradition of having a separate railway budget and bringing an end to this British era legacy.

The union budget will be presented on February 1, 2017.

A high-level team that used to take over a month’s time to prepare a 50-plus-page detailed speech for the railway minister will now have to ready highlights that will be squeezed into just two pages. A single Appropriation Bill, including the estimates of railways, will be prepared and presented by the ministry of finance to parliament and all legislative work will be handled by the finance ministry.

Senior railway officials told Governance Now that the major responsibility of preparing the railway component of the budget lies with the finance ministry. However, railway officials are helping officials in the finance ministry with the work. “Since it is the first year following the merger of the rail budget with the general budget, we are taking some time to get a grip, but next year onwards, things will be smooth,” said a source in the finance ministry.

A high-level team is at work helping the finance ministry, and it includes staff of the railway minister, the executive director (budget) and additional member (budget).

The merger

The idea of merging the rail budget with the general budget was mooted by a panel headed by economist and NITI Aayog member Bibek Debroy in an effort to restructure the railways.

The NITI Aayog had sent a 20-page note to the prime minister’s office (PMO). The note, titled “Dispensing with the Rail Budget” argued that the budget preparation and presentation exercise had failed to be of use to the sector.

“The railway budget became a mechanism to announce popular measures, new trains, new routes, new rolling-stock manufacturing factories, etc, with no concomitant focus on addressing the railways’ structural requirements, implementation of the ‘grand’ announcements, or funding needs,” the Indian Express cited from the note.

The practice of having a separate budget for the railways was kicked off by the British in 1924 as huge sums of money were then spent on the railways. The British separated the rail budget from the general budget after receiving a recommendation from a panel headed by British railway economist William Acworth in 1920-21. The railways then accounted for nearly 70 percent of the total budget. But now, the railway budget is merely 15 percent of the total union budget, said a report in Employment News.

No country in the world has a separate rail budget, but in India this practice continued even seven decades after independence.

The advantage

One of the biggest advantages of the merger for the railways is that it will not have to pay a whopping dividend to the government of India. The railways will save approximately Rs 9,700 crore annually, which after adjusting with the subsidy in payment of dividend would give a net benefit of around Rs 5,000 crore to the railways, according to a PIB release. It adds that the capital of the railways, estimated at Rs 2.27 lakh crore, on which annual dividend is paid will be wiped off.

Besides, the railways would continue to retain its functional autonomy on fares, tariff revision and delegation of financial powers. The sanctioning power of the railways will remain the same as earlier, which implies it can allocate funds to all essential projects across the board. Tariff revisions will be undertaken by the rail development authority (RDA). The railways will also have autonomy in announcing new projects, trains and expansion.

“This is a major decision in favour of the railways, as it will not be controlled by any other ministry, and can work with enough freedom. The ministry will continue to function as a departmentally run commercial undertaking,” said an official on condition of anonymity.

Sources stressed that the single budget would bring the railways to the centre stage and present a holistic picture of the financial position of the government.

While addressing the Economic Editors’ Conference on November 11, chairman, railway board, AK Mital said that it is a simple merger and has no adverse impact on the railways. “We will not have to pay any dividend to the government, which is a big leap towards developing railway infrastructure in the country,” he said.

“The finance ministry will provide gross budgetary support to the railways towards meeting part of its capital expenditure,” Anil Saxena, additional director general (PR), ministry of railways, told Governance Now.

Another official, who didn’t wish to be named, said the biggest benefit for the railways is that the constant pressure for running more trains and having more stations – unmindful of the economic and technical feasibility – will be reduced.

M Raghavaiah, general secretary, National Federation of Indian Railwaymen (NFIR), concurred: “As long as the autonomy of running the railways is not compromised, there will be no adverse impact on the railways. The second advantage of the merger is exemption from paying dividend of approximately Rs 9,700 crore to the government.”

He added, “The tariff revision authority should be left with the railways, which is incurring losses of around Rs 26,000 crore annually because of several concessions given to passengers. The government of India should compensate the losses to the railways. No other department is giving out such massive concessions to public.” 

But, there are some who are not happy about the decision.

Former financial commissioner, railway board, AV Poulose expressed dissatisfaction over the merger.

“It’s not a good decision because the railways is not a revenue earning department, like the income tax. Irrespective of the fact that the government is saying that autonomy of the railways will remain, I strongly feel that it is not so. There will not be full independence with the railways as it used to be,” said Poulose.

[email protected]

(The story appears in the December 16-31, 2016 issue)

Comments

 

Other News

PM visits crash site, meets the injured

Prime minister Narendra Modi on Friday visited the Air India flight crash site in Ahmedabad to assess the situation first-hand. He met officials and emergency response teams working tirelessly in the aftermath of the disaster. He also condoled the loss of numerous lives in the tragic air accident. He con

Air India flight crashes in Ahmedabad

The Air India flight to London crashed in Ahmedabad within munites of the take-off Thursday afternoon. There were 232 passengers and 10 crew members aboard, and reports suggest there was slim chances of anyone surviving. The Boeing 787 Dreamliner crashed and exploded in a fireball barely out

Cabinet approves two multitracking projects of Railways

The Cabinet Committee on Economic Affairs, chaired by prime minister Narendra Modi, on Wednesday approved two projects of the railways ministry with a total cost of Rs. 6,405 crore. These projects include:  1. Koderma – Barkakana Doubling (133 Kms): The project sec

Unlocking the boundless possibilities within

The legendary Jack Canfield (co-creator of Chicken Soup for the Soul series, and author who has sold more than 500 million books) says, “This is the book we’ve all been waiting for.” That is ‘Manifest of Your Infinite Riches’ by Pushkar Anand, founder of the Centre for Infinit

The Good, the Bad and the Ugly of AI

From ‘The Matrix’ to ‘Iron Man’, AI has long captivated our imagination. But what was once fiction has rapidly become foundation. AI is now transforming industries, economies and daily life. Nations are investing heavily – recognizing AI`s role not only as a technological marv

The Tricolour flies high over Chenab Rail Bridge: PM

Prime minister Narendra Modi celebrated the hoisting of the tricolour on the iconic Chenab Rail Bridge, the world’s highest railway arch bridge which was inaugurated on Friday, describing it as a moment of immense national pride and a testament to India’s growing capability to build futuristic

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now





Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter