Economy

Union Budget India 2018: Why Was The Railway Budget And Union Budget Merged In 2017?

Written By Saniya Rao | Mumbai | Published:

Hack:

  • The merger of Railway Budget with General Budget was based on the recommendations of the Committee headed by Bibek Debroy
  • The first Railway budget, under the system, can reportedly be traced to 1924.

In 2017, the Prime Minister Narendra Modi-led government ended the 92-year-old practice of holding a separate Railways Budget speech and instead merged it with the main Budget. This year as well, the two important budgets will be presented together by Finance Minister Arun Jaitley on Thursday.  

The merger of Railway Budget with General Budget was based on the recommendations of the Committee headed by Bibek Debroy, then a member of the NITI Aayog, and a separate paper on ‘Dispensing with the Railway Budget’ by Bibek Debroy along with Kishore Desai. A Committee with representatives from Ministry of Finance and Ministry of Railways had examined the issues involved and worked out the procedural details.

According to reports, at the time of British rule, having a separate Railway budget contributed greatly to the country’s GDP. The first Railway budget, under the system, can reportedly be traced to 1924.

The tradition of having the budgets separately continued even after India gained freedom despite the fall in revenue. The move to discard the Rail budget was said to be part of the Modi government’s reform agenda.

Advantages:

  • With the budgets being merged, less amount of time and effort would be required when a new policy is to be initiated and implemented.
  • The merger move is significant as it is expected to have political implications. The move will be free of political pressures as all those who have used Railways as a bargaining chip will now be prevented from doing so. There will be less of political pressure on the Railway budget and the centre will have the ultimate hold on the decision making.
  • The merger has allowed the Railways to get rid of the annual dividend they were made to pay for gross budgetary support from the government each year. It allows the Ministry of Finance greater elbow-room at the time of mid-year review for better allocation of resources, etc.
  • Furthermore, with the merger, the Railways will get rid of the annual dividend they have to pay for gross budgetary support from the government every year.
  • The presentation of a unified budget will help present a holistic picture of the financial position of the Government.
  • Merger of Rail Budget with Union Budget would facilitate multimodal transport planning between highways, railways and inland waterways

Disadvantages:

  • There are chances that the merger could gradually result in a fall in revenue or gross receipts in the general budget.
  • Furthermore, the merger reduces the chances of privatization of Indian railways which has often been viewed as a way to improve and develop them with world-class facilities and cleanliness methods.
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