Home / Politics / Policy /  Why we don’t need a railway budget

New Delhi: Railway minister Suresh Prabhu has written a letter to finance minister Arun Jaitley, seeking to scrap the 92-year-old practice of having a separate budget for Indian Railways.

According to a Press Trust of India report, Prabhu has argued that the integration of the general and railway budgets will enable formulation of a seamless national transportation policy.

The move follows a suggestion to the effect by Niti Aayog member Bibek Debroy in his report on restructuring the public transport behemoth.

A committee headed by Debroy last year had recommended that the railway budget should be phased out progressively and merged with the general budget.

The proposal comes at a time when the railway ministry is concerned that the implementation of the 7th Pay Commission award, which has recommended a 23.6% hike in salary of Central government employees and pensioners, will increase its wage bill by almost half, from 53,000 crore to 77,325 crore, in 2016-17, putting significant stress on its already weak finances.

Merging the railway budget and Union budget would mean the Indian Railways will not have to separately bear the burden.

Also Read: Suresh Prabhu writes to Arun Jaitley, seeks merger of railway and union budgets

The origin of the railway budget goes back to a report by British politician William Ackworth in 1924. He recommended a separate railway budget, given that most of the infrastructure spending by the British government went towards building railway lines.

Now, the railway budget size is quite small at 1.21 trillion compared to India’s overall budget of 19.8 trillion.

Debroy argued that there is no constitutional or legal requirement for a separate railway budget. While the Union budget is a Constitutional requirement and is presented under Article 112 of the Indian Constitution, which mandates an annual financial statement, the Constitution does not talk about the railway budget in particular.

Debroy held that a lot of resources are wasted in the process of preparing the railway budget, resulting in a very complicated relationship between the finance ministry and the Indian Railways, and that needs to be simplified.

The railway budget has also become an avenue for populism with members of Parliament demanding new trains and stops. However, Prabhu has shunned pandering to this populism and focused on building the already announced railway lines.

India has 66,000 km of railway lines, of which only 17,000 km have been added since Independence. Debroy argued that decisions on the expansion of the railway network and introduction of new trains should be taken by the railway board on a commercial basis and should not be left to Parliament.

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