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Railway Budget 2020: Why Railway Budget was merged in Union Budget; know key facts

Railway Budget 2020: The decision to merge both the budgets was based on the recommendations of the committee chaired by Member of NITI Aayog, Bibek Debroy.

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The BJP-led government decided to merge both the budgets- the Railway Budget and the Union Budget from the year 2017-18.

Railway Budget 2020: The 93-year old exercise of presenting a separate Railway Budget was removed by the Narendra Modi government on 21 September 2016. Instead, the BJP-led government decided to merge both the budgets- the Railway Budget and the Union Budget from the year 2017-18. The decision to merge both the budgets was based on the recommendations of the committee chaired by Member of NITI Aayog, Bibek Debroy. Besides, the budget merging decision was based on a separate paper on ‘Dispensing with the Railway Budget’ by Debroy along with Kishore Desai. A committee, which consisted of representatives from the Finance Ministry and the Railway Ministry, reviewed the issues involved, moreover, the committee also worked out the procedural details. According to a press release, issued by the Railway Ministry in November 2016, various salient facts on the merger were mentioned. Here are some key benefits on the merging of the budgets:

  • The Ministry of Railways will continue to function as a departmentally run commercial undertaking.
  • For the national transporter, a separate statement of budget estimates along with a demand for the grant will be created.
  • A single Appropriation Bill will be prepared and presented by a single Appropriation Bill, including the estimates of Indian Railways. Moreover, all legislative work connected to it will also be managed by the Finance Ministry.
  • Indian Railways will be granted exemption from payment of dividend to general revenues. Also, the capital-at-charge would be removed.
  • The Railway Ministry will be provided with Gross Budgetary Support by Finance Ministry towards meeting part of its capital expenditure.
  • In a bid to finance its capital expenditure, the national transporter will continue to raise resources from the market through extra-budgetary resources.
  • With the presentation of a unified budget, a holistic picture of the government’s financial position is presented.
  • The merging of the budgets facilitates multimodal transport planning between railways, inland waterways, and highways.
  • The merging of the budgets offers more elbow-room to the Ministry of Finance for better allocation of resources at the time of mid-year review.

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