Union Budget 2024: A Quick Snippet of the Merger of Railways Budget

The Railways budget in India used to be presented separately from the Union Budget but, the 92-year old tradition came to an end when the NDA government in 2017 decided to merge it based on the recommendations of Bibek Debroy Committee.
Indian Railways
Indian Railways is home to the fourth largest railway network in the world.

When the Union Budget 2024 will be announced next month, one sector that would be keenly watched by experts and commoners alike is the allocation of resources to the Railways sector. Every year, a substantial portion of the Union Budget is doled out to the Railways sector to bolster its infrastructure, growth and revenue building capabilities.

Indian Railways is home to the fourth largest railway network in the world. With an average of 13 thousand trains operating on a daily basis, nearly 24 million passengers travel every day in addition to 203.88 million tonnes of freight transported across the subcontinent. It is a colossal employment provider globally with a workforce of over 1.3 million individuals. India’s railway network is recognised as one of the largest railway systems in the world under a single management.

In the Fiscal Year 2023-24, the Finance Minister Nirmala Sitharaman allocated Rs 2,40,000 crore for the Railways. This was estimated to be approximately nine times the amount spent in the Fiscal year 2013-14. In the Interim Budget that followed in February this year, Rs 2,52,200 crore was allocated which was a 5.8 percent increase from the previous budgetary estimate.

Taking a stroll down the history lane, unlike the present day scenario, the Budget for the Indian Railways in its preceding years was presented separately from the General Budget.

In 1920, the ‘East Indian Railway Committee’ constituted under the chairmanship of Sir William Acworth recommended the consolidation and nationalisation of the Indian Railways. The recommendations of the committee sought to separate the Finances of the Railways from the General Budget. Hence from 1924 onwards, the Railways was presented as a separate budget. This tradition continued even after Independence, when India's first Railway minister John Matthai presented the Railway Budget in 1947.

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As years went by, there were intense discussions and debates over the viability of a separate budget for railways as recommended by the Acworth committee.

In an attempt to mobilise resources for major railway projects and restructure the Railway Ministry and Railway Board, a committee was constituted under Bibek Debroy in 2014. Bibek Debroy had also co-authored a paper with Kishore Desai titled ‘Dispensing with the Railway Budget’ which was instrumental in the project undertaken by the committee. The committee submitted its report in 2015.

The issues raised in the report and the paper were thoroughly examined in the Ministry of Finance with the Ministry of Railways. The report by the Joint Committee of both the Ministries gave their report on 07.09.2016.

Based on report, the 92 year old tradition became a thing of the past. The NDA government in 2017 decided to merge the Railways Budget with the Union Budget

Following the merger, the government announced that the Ministry of Railways will continue to function as a departmentally run commercial undertaking with a separate statement of Budget Estimates and Demand for Grants. It also stated that a single Appropriation Bill, including the estimates of Railways, will be prepared and presented by Ministry of Finance to Parliament and all legislative work connected therewith will be handled by Ministry of Finance.

The government went on to further state that the presentation of a unified budget will help present a holistic picture of the financial position of the Government with greater elbow room at the time of the year for better allocation of resources. The merger would also facilitate multimodal transport planning between highways, railways and inland waterways.

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