- By Aditya Pratap Singh
- Tue, 16 Jul 2024 06:11 PM (IST)
- Source:JND
In 2017, India's budgeting process underwent a significant change. The Union Cabinet decided to merge the separate railway budget with the general budget after a 92-year tradition. This landmark decision, proposed in 2016 and implemented for the first time in 2017, ended a nearly century-old practice that began in 1924. The move was prompted by the recommendations of the Debroy and Niti Aayog Committee to simplify the budget preparation process and strengthen the financial health of Indian Railways.
The historical practice of a separate railway budget originated with the British colonial government, based on the recommendations of the Acworth Commission. The first separate railway budget was introduced in 1924 when railways required more funding than all other administrative components combined. This policy also sought to protect foreign investments, particularly British interests in Indian Railways.
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However, several factors made it necessary to depart from this tradition:
1. Integration with the general budget
The primary reason for merging the railway budget with the general budget was to simplify the budget preparation process. Separate budgeting for railways was seen as outdated and unnecessarily complex. By merging the two, the government aims to make the process more efficient and coherent.
2. Improved financial health
Indian Railways often had to accommodate populist measures, such as new railway lines and passenger amenities, which were not always financially feasible. The merger aims to improve the financial position of Indian Railways by enabling better resource allocation and management. This integration allowed for more disciplined financial planning and management.
3. Long-term planning
The unified budget facilitates better planning and long-term investment in infrastructure. It enables a more comprehensive approach to transport infrastructure development, aligning railway priorities with the country's broader economic objectives. This comprehensive planning is critical to achieving sustainable growth and development.
4. Efficiency and accountability
Integrating the railway budget with the general budget enhances transparency and accountability. It ensures scrutiny of railway finances along with other sectors, leading to more disciplined financial management. This increased scrutiny helps to better monitor and control expenses.
5. Policy Coordination
Consolidation facilitates better coordination between railways and other modes of transport, such as roads and waterways. This integration promotes more coherent and integrated transport policies, which is crucial for a country with diverse and wide-ranging transport needs like India.
Arun Jaitley Proposed the move
The move was proposed by the then Union Finance Minister, Late Arun Jaitley, in the Rajya Sabha in 2016. He stressed that the functional independence of the Railways would be maintained even after the merger. The Special Planning Committee constituted for this purpose has highlighted the need to unify the two budgets for the benefit of the Indian economy and the Railways.
