Railways will save Rs 10k cr in 2017 after Budget merger

Railways will save Rs 10k cr in 2017 after Budget merger

By NAVTAN KUMAR | NEW DELHI | 8 July, 2017
Railways, Budget merger, Ministry of Railways, capital expenditure, Railway Budget, Union Budget
Ministry of Railways gets gross budgetary support for capital expenditure.

The merger of Railway Budget with the Union Budget from this financial year has started showing results and is expected to save Rs 10,000 crore by the end of year.

According to sources, there is considerable improvement in financial management as Railways is going towards double entry system following merging of the budget. At present only expenditure was recorded. 

However, in the double entry system, assets creation will also be recorded, which is expected to bring about more transparency and better monetary control. The merged Budget for 2017-18 was presented by Finance Minister Arun Jaitley on 1 February.

Railway has been paying about Rs 10,000 crore as dividend every year after getting Rs 40,000 crore, which after the new merged budget, will no longer be required to be paid. At the same time, the Ministry of Railways will continue to get gross budgetary support for capital expenditure. This will save the Railways from the liability payment of Rs 10,000 crore. On the other hand, Railways continue to raise resource from market through extra budgetary resources to finance its capital expenditure.

According to Gopal Krishna Agarwal, BJP spokesperson for economic affairs, due to merging of the budget, Indian Railways has been able to give a major push to improving infrastructure and overhauling.

“The Indian Railways has now better access of resources. The Ministry plans a capital expenditure of Rs 6.5 lakh crore in the next five years, out of which it has got a loan of Rs 1.5 lakh crore from the Life Insurance Corporation (LIC) of India. Merging of budget will also help monitor the Railway Development Authority, which is proposed to be set up by this year end,” said Agarwal

The decision to merge the Rail Budget with the Union Budget from 2017-18 was taken last year and was based on the recommendations of the Committee headed by Bibek Debroy, member NITI Aayog, and a separate paper on “Dispensing with the Railway Budget” by Bibek Debroy and Kishore Desai. A committee with representatives from the Ministry of Finance and Ministry of Railways examined the issues and worked out the procedural details.

However, there were divergent views on the impact of the merger, among the railway union officials though they said that the real impact will be visible only after the end of the fiscal.

Shiva Gopal Mishra, general secretary of All India Railwaymen’s Federation, there has been no tangible impact of the merger of the rail budget. “The government could not give passenger subsidy. The government has not been able to finance expansion of many projects and improve safety. Moreover, the government is not paying pension to railway employees—it is being paid from the railway fund. So where is the benefit?” he asked.

Mangesh Deshpande, president of the Bhartiya Railway Mazdoor Sangh, said: “It is difficult to comment on the impact at present. Though there appears to be improvement, we will have to wait for some more time to conclude whether the new move has helped the Indian Railways. But it is a fact that the monopoly of Indian Railways has ended and it will be directly under the scrutiny of the Finance Ministry.”

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