Separate Railways budget to be scrapped from 2017-18!



Indian Railways annual budgeting and accounting of its receipts and expenditure, hitherto known as a separate Railway Budget, will form part of the General Budget of the Union of India from 2017-18, as is learnt from the official sources in the Ministry of Railways, although a formal official announcement is yet to be made. Union Minister of Railways Suresh Prabhu has addressed a letter to the Finance Minister Arun Jaitly requesting him to merge Rail Budget with the General Budget from 2017-18. This follows recommendations of Debroy Committee Report on restructuring of Indian Railways in 2015 and the latest advice by the NITI Ayog to the Prime Minister’s Office (PMO) that the existing system of a separate Rail Budget be scrapped and made part of the General Budget of the Union.

The British Raj had separated Railway Budget from the General Budget in 1924 following Acworth Committee report on the ground, among others, that Railways would get a dedicated and focused attention to its development and upkeep in view of the fact that compared to other plant and machinery (capital intensive goods), railways were higher capital intensive bulk transport infrastructure, subject to faster corrosion and rusting with higher depreciation costs. For that matter, Railways’ dependence on the Finance Ministry for its day-to-day maintenance will be suicidal resulting in delay in work completion and hazarding safety standards. Even otherwise, Railways form part of General Budget as it is mentioned in Annual Plan of the Central Government, its receipts and expenditure.

Now, ever since the process of globalization of Indian economy commenced in July 1991, there has been mounting pressure on the successive Government from corporate media houses, pro market economists and opinion leaders to scrap separate rail budget, merge it with General Budget, to convert railways into a commercial entity by linking it to market economy, end cross subsidization of passenger services from profits of freight earnings, rationalize freight and passenger services to compete with roadways and low cost civil airlines, end populist measures, political sops and so on. The NITI Ayog, while agreeing with the advocates of market economy, maintains that rail budget is an avenue for populism with Members of Parliament demanding new trains, new stops and new lines, these decisions needed to be taken by Railway Board on commercial considerations and not Parliament. It also reasons that a merged rail budget with the General Budget will help simplify complicated relations of Ministry of Railways with the Ministry of Finance. Besides, the NITI Ayog maintains that general Budget is Constitutional, not the Railway Budget.

In view of the foregoing, the pro-capitalist, pro-business NDA Government appears to be out to commercialise Indian Railways not withstanding India is a welfare oriented democratic republic, where people are the sovereign masters, whose interests cannot be bartered away by the elected Government of the transient majority. The existing balance between the commercial aspects and social responsibility of railways (public welfare) cannot be done away altogether. It has to be maintained at all costs till poverty is eliminated and India becomes a developed nation.

Apart from the fact that the NITI Ayog’s recommendations are a recipe for privstisation of rail services to the detriment of the people of India, as the rail service costs will increase heftily, making it prohibitive to the majority of the people, who are poor. It will also affect market economy, impacting present cheap labour costs, with increased labour travel costs, making goods and services costlier. With that, Indian Railways will lose its sheen as the only visible lifeline to the general public. One hopes the NDA Government sees reason and maintains status quo. After all, nothing prevents the Government from improving rail services and augmenting its infrastructure within the existing frame!


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