Saturday, September 24, 2016

Dumping a 92-year-old colonial tradition

Shine Jacob | New Delhi September 22, 2016

Union Minister for Railways, Suresh Prabhu arrives at Parliament for presenting the Railway Budget 2016-17 in New Delhi. Photo: PTI


Employee federations of the Indian Railways on Tuesday welcomed the Cabinet decision to merge the Railway Budget with the Union Budget, saying it might help the railways in recovering from financial trouble. They also demanded that the finance ministry take up the national carrier’s economic liabilities.


“We welcome the move to merge both the Budgets. The government had taken us into confidence before this. This will help the railways, if the finance ministry also takes up its subsidy burden and pension liabilities. Moreover, the time of Parliament will also be saved,” said Shiva Gopal Mishra, general secretary of All India Railwaymen’s Federation.


Pension liabilities of railways are to the tune of about Rs 8,000 crore annually. In addition to this, with the implementation of the 7th Pay Commission, it will have to bear an additional burden of Rs 40,000 crore. It also shoulders a Rs 35,000-crore subsidy burden. Every year, the railway pays about Rs 10,000 crore as dividend in return of the gross budgetary support the government gives. This will be waived off from now. This will lead to net savings of Rs 4,100 crore for the railways.

“The merger will be advantageous for railways if the finance ministry is likely to bear the social obligations like subsidies. For all other ministries, it is the finance ministry that bears the pension liabilities. We want the same to happen with the railways ministry, too. Currently, the railways is paying this from its own resources. A lot of unwanted fare concessions are also there. These should be borne by the finance ministry,” said M Raghavaiah, general secretary of National Federation of Indian Railwaymen.

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. Indian railways is the eighth largest employer in the world and the largest in India with an employee strength of 1.334 million.

However, the finance ministry said since the railways has its own revenue source, it would continue to bear the pension and subsidy liabilities. On the other hand, there is likely to be a cut on gross budgetary support, as the dividend is waived off.


The railways will be having full autonomy on fares tariff revision and market borrowings.

The idea of merger was first mooted by NITI Aayog member Bibek Debroy, dumping a 92-year-old colonial tradition. Union Rail Minister Suresh Prabhu wrote to the finance ministry recently, seeking a merger of the two Budgets.

According to Prabhu, the national carrier is burdened with Rs 60,000 crore worth of public service obligation. The Railway Budget was separated from the main Budget, following the recommendation of a panel headed by British railway economist William Acworth in 1920-21.

The Railway Budget got separated from the general Budget in 1924, when it accounted 70 per cent of the total Budget.

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