Cabinet may approve merger of Railway Budget with General Budget today

The decision for the merger of Railway Budget with the General Budget is likely to get the official seal at the Union Cabinet meeting which is slated for Wednesday.

Railway Minister Suresh Prabhu, who has already given his consent on the budget merger proposal, will attend the cabinet meeting along with Chairman Railway Board AK Mital to be part of the historic decision that will end the 92-year old practice of presenting the separate Railway Budget.

Cabinet is likely to take up the budget merger issue on Wednesday, sources in railways said.

A joint committee set up to finalise the modalities for the merger of Rail Budget with the General Budget had submitted its report in the first week of this month to the Finance Ministry recommending various changes including waiving off of payment of dividend by railways though the practice of getting gross budgetary support (GBS) from the exchequer will continue.

However, the Cabinet will take a call on whether to continue with providing about Rs 5000 crore as subsidy to railways for construction of strategic railway line.

In the 2016-17 fiscal, railways dividend was Rs 9731 crore and subsidy was Rs 4301 crore as a result the national transporter had to pay Rs 5430 crore to the exchequer.

The General Budget to be presented by the Finance Minister will also have a separate annexure with details of railways’ expenditure, according to the recommendations of the joint committee comprising senior officials from Railways and Finance Ministry.

For example, the purchase of 300 aluminium coaches from the market will reflect on the expenditure on account of acquiring new rolling stock for the next fiscal.

The report is believed to have suggested ways for dealing with the railways’ huge financial burden, once the Railway Budget is merged with Union Budget.

At present, the railways has to bear an additional burden of about Rs 40,000 crore on account of implementation of the 7th Pay Commission awards, besides an annual outgo of Rs 33,000 crore on subsidies for passenger service.

The delay in completion of projects resulted in cost overruns of Rs 1.07 lakh crore and huge throw-forward of Rs 1.86 lakh crore in respect of 442 ongoing rail projects.

The recommendations will be placed before the Cabinet which has to decide on the subject.

Last month, Railway Minister Suresh Prabhu had said, “I have written to Finance Minister Arun Jaitley for merger of the Railway Budget with the General Budget. This will be in the railways’ interest and also in the nation’s interest. We are working out the modalities.”