Examine the salient features of merger of Railway and General budget and the benefits likely to accrue therefrom.

Examine the salient features of merger of Railway and General budget and the benefits likely to accrue therefrom.

Approach

  • Introduce with the decision of govt. regarding the merger of both budgets.
  • Give the salient features of merger.
  • Then discuss the benefits of the merger.
  • Conclude appropriately.
Model Answer :

Recently, the Government has merged the Rail Budget with the Union Budget from budget year 2017-18. The merger of Railway Budget with General Budget is based on the recommendations of the Bibek Debroy Committee. The 92-year-old practice of presenting a Railway budget based on recommendations of Acworth committee has come to an end.

Salient features of merger of Railway and General Budget are:

  1. Ministry of Railways will continue to function as a departmentally run commercial undertaking;
  2. A separate Statement of Budget Estimates and Demand for Grant will be created for Railways;
  3. A single Appropriation Bill, including the estimates of Railways, will be prepared and presented by Ministry of Finance to Parliament and all legislative work connected therewith will be handled by Ministry of Finance;
  4. Ministry of Finance will provide Gross Budgetary Support to Ministry of Railways towards meeting part of its capital expenditure.

Following benefits are likely to accrue from merger:

  1. The merger will help the Railways get rid of the annual dividend of 10,000 crore they have to pay on account of receiving gross budgetary support from the government every year.
  2. It would also help the Railways raise extra capital expenditure to enhance connectivity in the country.
  3. Merger of Rail Budget with Union Budget would facilitate multimodal transport planning between highways, railways and inland waterways.
  4. The Rail Budget will be free of political pressures. So no new trains will be introduced based on populism.
  5. It will allow Ministry of Finance greater elbow-room at the time of mid-year review for better allocation of resources.

The merger move is significant for effective functioning of the railways but much will depend on the efficient utilization of the resources. So government needs to focus on other areas like integrated transport policy, railway safety etc.

Subjects : Economy

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