Why was Rail Budget presented separately from Union Budget earlier?

Railway Budget 2017 will be merged with the Union Budget and presented on February 1, 2017

NEW DELHI: Finance Minister Arun Jaitley will present the Union Budget 2017 on February 1, 2017. The Budget 2017 is imperative, mainly due to Prime Minister Narendra Modi’s currency demonetisation decision that left India in a dazed state. Post demonetisation, citizens are looking forward to some ease in the taxation system and are eager to understand how the Narendra Modi government plans to move ahead. Budget 2017 will also put an end to the colonial system of presenting the Railway Budget separately from the Fiscal Budget. The budget has been presented at the end of every financial year, giving us a road plan for the upcoming fiscal year. The railway budget has been presented separately from the general budget since 1924.

In 1920-21, a ten member-Acworth Committee recommended to the British officials that the railway budget be separated. During the 1924 budget in British ruled India, the officials decided to separate the railways from the general budget. The main reason behind this decision was the railways was the largest industrial asset of the country and occupied a significant portion of the budgetary allocation. This era saw 75-80% of budget allocation for railways and played a key role in the British officials’ decision of presenting it separately.

This colonial practice was followed by the independent India, making it a ritual for the Railway Budget to be presented separately by the Railway Minister. The railways used to present the Rail Budget two days before the general budget presentation. The Indian Railways also had to pay a dividend, gross budgetary support, to the central government while following this process. However, with time the contribution of Railways has been decreasing, now the Indian Railways contributes to 4% of the financial budget. The exponential growth in the Indian economy made the expenditure of railways comparatively small.

However, this practice continued as the Indian Railways had 44% of civilian employees according to a 2009 report. Indian Railways has a network comprising of 115,000 km of tracks and a route of over 65,000 km. It has to maintain 7,172 stations and runs 12,617 passenger trains and 7421 freight trains daily, making it a massive infrastructural sector.

The NDA government took cabinet’s approval to merger the railway budget as there are various other areas like Defence, which require a higher expenditure that the railways. The Finance Minister, Arun Jaitley had earlier informed that the Railway Budget would be part of the general budget, while the functional autonomy of the Railways will be maintained. This move will save the Indian Railways from paying Rs. 10,000 crore as dividend for getting gross budgetary support.