NSIM

Cabinet clears the air on Rail Budget-Union Budget merger: Indian Railways relieved of 3 major expenses

In a sweeping recast of India's annual budget process, the government ended the 92-year-old practice of having a separate rail budget, giving the embattled organization political space to work below the radar and implement the massive reforms needed to turn it around.

A committee headed by Niti Aayog member Bibek Debroy had noted that a separate railway budget was only a ritual as it had diminished in size relative to the general budget.                                                      

Post-merger of Rail Budget with the General Budget, the Finance Ministry will be exploring ways to cut short railway expenses particularly concession and subsidy on passenger fares.

The government will form a committee to look into the aspect of concessions to as many as 53 categories, including senior citizens, sportspersons, freedom fighters and differently-abled among others.

Indian Railway incurs a whopping Rs 34,000 crore annually towards social service obligations, which essentially includes cross-subsidies involving fares and freight and nearly 53 types of concessions.

RAILWAY OFFERS HUGE SUBSIDIES

It offers 43 per cent subsidy on a single train journey to its passengers.

This is in addition to the free journeys permitted to certain sections like MPs, MLAs and railway officers. "As far as the burden of concessional fare in different categories including sportspersons and patients is concerned, the government will constitute a separate committee to find out a way forward for it," a senior railway ministry official said.

CONCESSIONS POPULIST MEASURES

He, however, said these concessions were essentially populist measures announced by successive governments.

"With scrapping of the railway budget, the finance ministry may consider cutting short on these concessions," he indicated. Railway Minister Suresh Prabhu claimed that merger of the two budgets will not affect the 'distinct identity' of the railways and its functional autonomy.

"The government will also take an initiative to ensure that there is a separate discussion to the railways expenditure each year so that there is a element of detailed Parliamentary scrutiny and accountability," Prabhu said.

RAILWAYS NOW RELIEVED

Railways will now also be relieved of the burden of major expenses on salary and pension and fuel expenditure. At present, the wage bill of railways is around Rs 70,000 crore and pension bill amounts to nearly Rs 45,500 crore while the annual fuel bill is more than Rs 30,000 crore.

While it spends Rs 18,000 crore on diesel purchase, Rs 12,000 crore is the annual cost of electricity purchase. Salary and pension bill along with fuel expenses account for nearly 75 per cent.

“Abolishing the rail budget will give the national transporter an annual breather of Rs 9,700 crore even if it won't be able to get out of its social obligations”,  the Minister told, pledging further reforms.