Union Cabinet approves merger of Rail budget with General budget

The Union Cabinet has approved the proposals of Ministry of Finance to merge of Railway budget with the General budget.
Merger of Railway Budget with the General Budget will be effective from the Budget 2017-18.  It will end 92-year-old tradition as the presentation of separate Railway budget started in year 1924. Since then it has continued after independence as a convention rather than under Constitutional provisions.
The merger has been approved with the following administrative and financial arrangements of Railways

• It will continue as a departmentally run commercial undertaking to maintain its distinct entity as at present.
• It will retain its functional autonomy and delegation of financial powers etc. as per the existing guidelines.
• Its existing financial arrangements will continue wherein it will meet the revenue expenditure from revenue receipts.
• The Capital at charge estimated at 2.27 lakh crore rupees on which Railways pays annual dividend will be wiped off.
• Consequently, Railways will not have dividend liability from 2017-18 and the Union Ministry of Railways will get Gross Budgetary support.
• It will save Railways from the liability of payment of approximately 9,700 crore rupees as an annual dividend to the Central Government.

Benefits of merger

• The unified budget presentation will bring the affairs of the Railways to centre stage and present a holistic picture of the financial position of the Government.
• It is expected to reduce the procedural requirements and instead bring into focus on the aspects of delivery and good governance.
• The appropriations for Railways will form part of the main Appropriation Bill due to the merger.

Month: Current Affairs - September, 2016