Beware: Now FM Jaitley will fix your rail fares
- Cabinet scraps a 92-year old tradition of having a separate Railway Budget
- Move to be good for Indian railways says minister Suresh Prabhu
Follow
A foregone decision
This decision on Wednesday is just an official announcement as the actual dye was cast last month when it was decided that the 92-year-old practice of presenting a separate Rail Budget was to be discarded As the Finance Ministry had accepted railway minister Suresh Prabhu’s proposal to merge it with the General Budget. “I had written to Finance Minister Arun Jaitley for merger of the Rail Budget with General Budget. This will be in the Railway’s interest and also in the nation’s interest. We are working out the modalities,” railways minister Suresh Prabhu told PTI.
Financials
Cash-strapped Railways will save about Rs 10,000 crore annually as it will no longer have to pay dividend if the separate rail budget is scrapped. A joint committee, set up to finalize the modalities for the merger of Rail Budget with the Budget, had submitted its report to the finance ministry recommending various changes, including waiving off of payment of dividend by railways though the practice of getting gross budgetary support (GBS) from the exchequer, will continue. The Railways pays about Rs 10,000 crore as dividend a year after getting about Rs 40,000 crore. The public sector behemoth has to bear an additional burden of about Rs 40,000 crore on account of implementation of the 7th Pay Commission awards, besides an annual outgo of Rs 32,000 crore on subsidies. Besides, the delay in completion of projects resulted in cost overrun of Rs 1.07 lakh crore and huge throw-forward of Rs 1.86 lakh crore in respect of 442 ongoing rail projects. According to a senior Railway official, the move to discard the age-old practice of a separate Rail Budget is part of the Modi government’s fiscal reform agenda
Fares
With the merger, the issue of raising passenger fares, an unpopular decision, will be the Finance Minister’s call. Prabhu had also told Rajya Sabha on August 9 that he has asked the Finance Minister to merge the Railway Budget with General Budget in the long-term interest of national transporter as well as the country’s economy. All-India Railwaymen’s Federation General Secretary Gopal Mishra said that the railway ministry’s autonomy will be lost in the merger. “But we have to see in what form the merger will happen,” he said.
Politics
The merger move is significant as it is expected to have political implications. As it is common knowledge that almost every Railway Minister, particularly in coalition governments, has addressed his constituencies by doling out favours by way of new trains and projects.
Way forward
The General Budget, to be presented by the finance minister, will also have a separate annexure with details of plan and non-plan expenditures to be incurred by the railways, according to the recommendations of the joint committee comprising senior officials from railways and finance ministry. The panel is understood to have advocated that the General Budget should have a separate annexure for the rail budget detailing the grant, expenditure and new projects for the next fiscal.
