Discuss Pros and Cons of merging the Railway Budget with General Budget?

After 92 years the Railway Budget will cease to exist -- instead, beginning next fiscal year, it will be presented along with the Union Budget. 

In a letter, Railways Minister Suresh Prabhu urged Finance Minister Arun Jaitley to merge the two Budgets together and after raising the matter in the Rajya Sabha, the Finance Ministry has constituted a five-member committee to look into the matter and submit a report by August 31. For the railways, there are many implications ,both positive and otherwise,resulting from this marriage. Here are a few pros and cons.

 PROS 

--Folding the Rail Budget into the main budget will result in a seamless transportation policy. During the British Raj, Railway Budget made up for 85 percent of the country’s general budget. Now, it accounts for only 15 percent.

 -- The Rail Budget will be free of political pressures. It has been used as a bargaining chip by major political parties to enlist smaller parties into a coalition. Introducing new trains in home states usually netted votes of minor parties. Not anymore. 

-- When Rail budget had to be introduced separately, the railways needed to pay an annual dividend to render its budgetary support to the government. The railways will be free of this now and the same fund could now be used in better ways for development the conditions of Indian railways.

 --Our railways are running on loss. There are lesser funds for development plans and most of them are wasted in wrongful manner when there emerges a demand from the regional MLA who promised new trains and stoppages for their location during the time of election. When it goes into the hands of finance ministry, it would mean and absolute end to this and a more commercialized distribution of resources.

--Bibek Debroy of NITI Aayog had written in his report: "The railway budget is an avenue for populism with MPs demanding new trains and stops for existing ones. These decisions should be taken by railway board on a commercial basis. A lot of resources are wasted in the process of preparing it. A very complicated relationship between Finance Ministry and Railways has evolved. We should simplify it." 

-- Merged rail budget can look into the matters of Safety, which has to be given most priority rather than creating the separate states for popular votes. Creation avenues for the modernisation, High speed networks, connectivity to the last point, increasing the sanitation in the railways and on tracks, modernising the railway platforms and other important corners of development can be looked upon with merger.


-- With or without separate rail budget, General budget has to support it with huge amounts. By merging and reducing the duplication can increasing the outlay for the railway developments. 

CONS 

-Once the Rail Budget is subsumed under the main Budget, all rail-related expenditures will also become part of the Union budget. Here is the downside: a fall in revenue or gross receipts in the general budget will mean the finance ministry will be carrying out similar cuts in expenditure allocated to railways, too.

 -The merger may make the Railways just another government department. In the process, it could also lose its commercial character. 

--The Finance Ministry, which will be presenting the Budget, will be hamstrung as it won't be able to raise passenger fares. Because doing so won't win it votes. It in turn won't bring in money for the railways and hurt modernisation plans. Also, with no fare hike, salaries, fuel and equipment costs will also suffer. 

-As the government's infrastructure expansion plans rely a lot on railways, the most used mode of freight transport .the merger can actually cover cracks, if any in the rail department. 

-There have previously been talks of privatization of Indian railways in order to improve and develop them with world class facilities and cleanliness. It was not well received earlier and after the merging, there will a complete end to any future chances of privatization. At the efficient hands of government employees, nothing big could be expected. 

By seeing the above cases, the pro’s seem to outweigh the con’s. Hence it is prudent and pragmatic to merge the railways budget with general budget.


Background History:-

In 1921, British railway economist, William Mitchell Acworth was appointed chairman of the Committee on Indian Railways. The report of the committee, known as the “Acworth Report”, led to reorganization of Indian Railways; thus separating the railway finances of India from the general government finances. In short, this led to creation of a separate Railway Budget, an arrangement which continues in independent India.

Q) which committe was the brain behind the merging?

Recently submitted Bibek Diberoy's Committe report proposed the merging of rail budget with General Budget.