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. According to the government, the unified budget will bring Railways to centre stage and present a holistic picture of financial position of the government. With the merger of the rail and general Budgets, and the move to advance the date of presenting the Budget to February 1, there will be no need of separate Appropriation Bills as well as Vote on Account, as is the current practice.
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.
The merger means that Railways would not have to pay dividend to the central government and its capital at charge would stand to be wiped off. Like for other departments, the ministry of finance will provide gross budgetary support to the Railways for incurring its capital expenditure. The Railway Convention Committee, which reviews the rate of dividend payable by the railways to the government, will also be disbanded.
Commenting on the move Railway Minister Suresh Prabhu said, “Railways distinct identity will be maintained. Financial powers to the General Managers, DRMs will continue to be as they are. Railways will now not need to pay dividends. They used to be approximately Rs 10,000 crore. Railways will now find help in increasing its capex.”