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Updated: Aug 18, 2021


  • A separate railway budget - started by the British in 1924 based on the recommendation of Ackworth committee- seen as a commercial activity funded by the British government and dividends were to be paid to shareholders.

Now : Merge the Rail Budget and the General Budget - putting an end to the populism.

WHY? Recommendation of a NITI Aayog committee headed by its member Bibek Debroy, reflects the decrease over time in the relative size of the Rail Budget compared to some of the other components in the General Budget, such as defence and roads & highways, reducing it to a mere “ritual”.


IMPLICATIONS : The merger would help in the followinG :

  • The presentation of a unified budget will bring the affairs of the Railways to centre stage and present a holistic picture of the financial position of the Government.

  • The merger is also expected to reduce the procedural requirements and instead bring into focus, the aspects of delivery and good governance.

  • Consequent to the merger, the appropriations for Railways will form part of the main Appropriation Bill.


  • PRIVATISATION ? It will pave the way towards privatisation

  • END OF AUTONOMY ?It would end the “autonomy” of the largest public carrier in the country. V. Railway Minister Suresh Prabhu told the media briefing = The Railways will continue to maintain their distinct entity and retain its functional autonomy and delegation of financial powers + will continue to meet all their expenditure, including ordinary working expenses, pay, and pensions from their revenue receipts.

  • AFFECTED COMMON MAN > The Railways have been the cheapest mode of transportation for the people of the country but with this decision of the Union government the faith of the common people in it will be dented.

  • DISMANTLING COLONIAL LEGACY ? Discontinuance of the colonial legacy. Really ? Our entire political system is based on the Westminster model and our statute book awash with colonial laws. We could have scrapped all those as well.

  • Scrapped the Railway Convention Committee (RCC) consisted of 18 members — 12 members from Lok Sabha and six members from Rajya Sabha - which determines the rate of dividend to be paid to the Finance Ministry . Thiswill free the Railways of the obligation of paying the annual dividend. But really?it seems to be a loan waiver =granted to individuals or institutions in extreme financial distress = Which is not correct for the present situation

  • ENDING POPULIST TREND : Railway Budget = a platform for populism and political grandstanding WHY? nowhere in the world is a political functionary - RAILWAY MINISTER- called upon to present a financial report card of the country’s largest public undertaking in the full glare of publicity.

IF YOU REALLY WANT TO DO AWAY WITH POPULISM ? Why would you set up a new Railway zone to placate a State government as part of a “special package” is proof that it is possible to be “populist” outside a separate budget.

Why should there be a separate budget for the Railways?

  • Bigger in size and scope

  • an operational ministry

  • it earns as well as spends, unlike other ministries that only spend.

FACTS NOT RELEVANT BUT SUBSTANTIATING THE ABOVE : Its gross earnings (Rs.1.68 lakh crore in 2015-16) are among the highest for any Indian organisation, public or private; it has a staff strength (13.2 lakh) that exceeds that of the Indian Army; it fully meets the pension liabilities of its retired employees (13.8 lakh) out of its own earnings unlike other ministries; it follows an accounting practice, though not up to the standards of a purely commercial establishment, that has a number of features of a commercially-run organisation.

Why such a hurry to bury it ? Obfuscation = TO CONFUSE.

  • triple whammy of a fall in revenues,

  • a sudden spike in expenditure due to implementation recommendations of the Seventh Pay Commission, and

  • an increasingly unsustainable interest burden on market borrowings.

A separate Budget would have meant having to openly declare an operating ratio in excess of 1.0 (in layman’s language, that means one is living beyond one’s means)

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