For 92 years, India had a separate railway budget. Every year ahead of the union budget, the railway minister would present it with great fanfare. But in 2017, long-standing practice ended. Ever wondered why?
The shift happened when then finance minister Arun Jaitley merged the two budgets presenting the first combined budget for 2017 and 18.
Reasons for Merging the Railway Budget with the Union Budget in 2017
Why was this change made
The tradition of a separate railway budget dates back to 1924 based on recommendations by Eck Worth Committee. Even post-independence, it continued with John Mathai presenting the first budget in 1947.
Fast forward to 2016, Niti Aayog led by economist Vivek Debroy Submitted a white paper arguing that a separate railway budget was not necessary. The reason, railways were struggling financially and needed better integration with overall government spending.
The merger would allow a more holistic view of government finances and better resource allocation. Railway minister Suresh prabhu pushed for the change and Arun jaitley took it forward in the parliament. The decision was made and the merger happened in 2017.
Key changes in railway budget merger 2017
The ministry of railways still functions independently. A separate budget estimate for railways is still presented. The finance ministry now handles all legislative matters related to railway finances. The merger enables better multimodal transport planning integrating rail, road and waterways. Since then, the railway budget has been part of the union budget allowing for better financial planning and sharper focus on modernization.
The present finance minister of India nirmala sitharaman prepares to present the 2025-26 budget period all eyes are on what’s next for the Indian Railways.
Some features of the merger
- The ministry of railways will continue to function as a departmentally run commercial entity by ensuring that it will retain its operational autonomy while aligning with government control.
- Earlier railways had a separate budget but now it will be included in the union budget as one appropriation bill by the Ministry of Finance.
- The role of paying the dividend that is profit share to the government from its earning has now been removed which will save around 10,000 crore INR every year. This money can be used for developing railway infrastructure and services further.
- The Ministry of Finance will provide gross budgetary support in order to help railways fund major projects to ensure that railway infrastructure improves without financial burden.
- However railways can raise money from extra budgetary resources such as loans foreign investments and bonds. It implies that railways can finance new projects without losing its financial flexibility.
- The integration of railway budgeting with the main budget will allow better coordination with other transport sectors such as highways and waterways. It will ensure all well planned and interconnected transport facility all across the country.
- This decision will help the government in order to relocate funds more efficiently throughout the year. The Ministry of Finance can simply adjust railway funding based on real time performance and deals which will lead to better financial planning.
Uion budget 2017-18: Key details upon railway infrastructure
- For transportation sector as a whole, including rail, roads, shipping, provision of rupees 2,41,387 crores has been made in 2017-18.
- The total capital and development expenditure of railways has been pegged at rupees 1,31,000 crores. This includes 55,000 crores provided by the government.
- For passenger safety, a Rashtriya Rail Sanraksha Kosh will be created with a corpus of rupees 1,00,000 crores over a period of five years.
- Unmanned level crossings on broad gauge lines will be eliminated by 2020.
- In the next three years the throughput is proposed to be enhanced by 10%. This will be done through modernization and upgradation of identified corridors.
- Railway lines of 3500 kilometers will be commissioned in 2017-18. During this year, at least 25 stations are expected to be awarded for station redevelopment.
- 500 stations will be made differently abled friendly by providing lifts and escalators.
- It is proposed to feed about 7,000 stations with solar power in the medium term .
- SMS based Clean My Coach Service has been started.
- ‘Coach Mitra’, a single window interface, to register all coach related complaints and requirements to be launched.
- By 2019, all coaches of Indian Railways will be fitted with bio toilets. Tariffs of Railways would be fixed, taking into consideration costs, quality of service and competition from other forms of transport.
- A new Metro Rail Policy will be announced with focus on innovative models of implementation and financing, as well as standardisation and indigenisation of hardware and software.
- A new Metro Rail Act will be enacted by rationalising the existing laws. This will facilitate greater private participation and investment in construction and operation.
- In the road sector, Budget allocation for highways increased from ` 57,976 crores in BE 2016-17 to ` 64,900 crores in 2017-18.
- 2,000 kms of coastal connectivity roads have been identified for construction and development.
- Total length of roads, including those under PMGSY, built from 2014-15 till the current year is about 1,40,000 kms which is significantly higher than previous three years.
