Crediting Prime Minister Narendra Modi for the idea of merging the Railway Budget with the general Budget, Bibek Debroy, Member of NITI Aayog has said, “It is not my idea at all. It was the Prime Minister’s idea. But yes, in the railway committee and in the subsequent note that I wrote, we argued out the case for not having a separate railway budget as we understand it today.” “Every organisation has a budget, so will the railways. The Railways will continue to have a budget. All that happens is that this annual ritual of that particular budget being presented through a budget speech in Parliament ceases,” Debroy told CNBC-TV 18.
Assuring that Indian Railways will continue to have autonomy, Debroy said, “The budget will still be there. The Railways will be free to do what it wants. There are structural reforms that are important, those will continue to happen in parallel, be they through an independent regulator which the Railways are now going to call a Railway Development Authority, or be they through a transition to proper accounting practises.” “So far as the relationship between the Railways and the Union Finance Ministry is concerned, we will await the details, which I am sure will be forthcoming,” he added.
Debroy pointed out four areas that will find focus. “There are three or four major issues in terms of those relationships (between Railways and Finance Ministry). First is what happens to the dividends. Dividends are not like corporate dividends. Some people are generally unaware that this is actually a repayment of debt that the Union government extends to the Railways in perpetuity. Only the interest gets repaid, the principal is never extinguished,” he said. “Second is, what happens to the existing debt, does that continue or not. Third, what happens to the gross budgetary support, what form does it take. Fourth, what happens to the windows the railways has today for borrowing, because the railways cannot directly borrow,” he concluded.
— CNBC-TV18 News (@CNBCTV18News) September 21, 2016
In what is being seen as a big move, the Cabinet chaired by Prime Minister Narendra Modi has approved scrapping a separate Railway Budget and merging it with the General Budget. Even after the separate railway budget is scrapped and its proposals clubbed in the general Budget, the Railways would continue to maintain its distinct entity status as a departmentally-run commercial undertaking as at present. Railways would be allowed to retain its functional autonomy. The delegation of financial power rules will also continue as is the case now.