Budget merger: Railway autonomy to stay

Rail, FinMin officials discussing issues like pension, dividend, budgetary support

The rail ministry will have autonomy on fares, tariff revision and market borrowing but pension liabilities, dividend and gross budgetary support are unresolved, with the Cabinet likely to soon approve the merger of the Rail and General Budgets.

"The ministry of railways has its own revenue stream. It decides on capital spending and borrows from the market. Its financial independence will not be taken away," said an official, aware of deliberations between the rail and finance ministries.
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Sources said this week's Cabinet meeting would only decide on the merger of the two Budgets and advance the date of its presentation in Parliament. A Cabinet note, with these proposals as well as elimination of the classification of expenditure as Plan and non-Plan and a shift to outcome-based budgeting, has been circulated for inter-ministerial consultations.

A five-member committee recently submitted its report on the merger of the Rail and General Budgets and met officials in the Prime Minister's Office last week. "The report has not mentioned pension liabilities, dividend and gross budgetary support. It states these issues will be taken up at a higher level later," said another official.

The rail and finance ministries have agreed tariff revisions will be undertaken by the Rail Development Authority. The railways will also have autonomy in announcing new projects, trains and expansion.

"You are changing the way the Budget is presented. There will be sticking points. These issues are being discussed between the two ministries and will be decided when the Budget is prepared," the first official said.

The Railways wants to stop paying annual dividend for the gross budgetary support from the government. If this is granted, the Railways could save Rs 10,000 crore.

The Railways has to pay Rs 40,000 crore in higher salaries after implementations of the 7th Pay Commission. It also shoulders a Rs 35,000 crore subsidy burden. The delay in completion of 442 rail projects has resulted in a cost overrun of Rs 1.07 lakh crore and a throw-forward of Rs 1.86 lakh crore.

NITI Aayog member Bibek Debroy had suggested the merger of the two Budgets, dumping a 92-year-old colonial tradition. Rail Minister Suresh Prabhu wrote to the finance ministry recently, seeking a merger of the two Budgets.

The move could end the tradition of rail ministers announcing projects in their own constituencies or states.