The Annual Fanfare and media glitterati associated to the Rail Budget will be the thing of the past. The Annual Budget of 2017-18 will be presented by the Finance Minister and there would be no separate Rail Budget .It takes an apolitical Railway Minister like Mr. Prabhu to let go of this colonial vestige which has frequently been used by incumbents to achieve political ends. Other major changes proposed are doing away with the PLAN- NON PLAN distinction which had no rationale whatsoever. The advancement of Budget Presentation to the first week of february to ensure passage of the budget early in the Financial Year is also a welcome move.
When talking about Indian Railways-some historical inputs are always in order :-The separation of Railway Budget from the annual budget was done on the recommendation of Acworth Commitee in 1924. The reasons enumerated were -:
a) The share of railways in overall finances of GOI was greater than 60%. Any fluctuation in railway finances could potentially disrupt the whole budget.
b)Railway was a priced entity which invited a lot of private investments and had to show commercial viabily to guarantee promised returns.
The main rationale for the separation don`t hold good now. Railway`s share is barely 1% of the GDP and is behind defence sector also. Secondly, it operates as a public department through Gross Budgetary Support(GBS). So, logically ,this is a good step by the government. But the main reason for this merger is to stop political populism in terms of new trains, stations, stoppages which was often the annual affair due to coaltion compulsions. Constitutional experts however stress that such an announcement should have been done by passing a resolution in the parliament to provide sanctity to the move.
The key issues that must be stressed are-:
a) Financial autonomy of the railways must be preserved at all costs. It is one of the few entities that has to earn revenue and ensure financial sustainability. Also it works 24*7 running more than 20,000 trains and carrying more than 2.5 Crore people daily, thereby making swift decisionmaking on the ground.
b) Railways must get required help from the exchequer to maintain safety and also its competitiveness. It must be stressed that worldwide , railways run at losses and are supported by the government. It becomes all the more pertinent for a poor country like ours to support its Railway.
The move will relieve the railways of some 9000 Crore of dividend it pays to the government .It is basically an interest on the loan taken by railways for its capital needs(Capital at charge) which is in perpetuity. Its high time that the coffers of railways are replenished with funds to buy new assets and replace overaged ones (DRF). Next comes the pension liabilities which ,if calculated on actuarial basis ,comes out to the tune of 45,000 Crore per year and should be set aside in the Pension Fund(PF). Capital Funds for capacity augmentation and decongestion is the utmost priority in the decades to come.
A financially sound Railways is the only way forward for a country with such geography, demography, inequality and size.
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