When and How Railway Budget Became a Part of the Union Budget

On February 1, Union finance minister Nirmala Sitharaman will present her fifth straight budget in Parliament. Do you know the almost century-old practice of 1924 presenting a separate Railway Budget ahead of the General Budget has been done away with? In 2017, the Railway budget was presented with the general budget for the first time and the practice continues.

A white paper recommendation from a Niti Aayog commission called for ending the practice of a distinct railroad budget. Suresh Prabhu, who was the then-railway minister, received the recommendation. The minister then requested in a letter to the late Arun Jaitley, the finance minister at the time, to combine the Railway and Union Budgets for the benefit of the Indian economy and the Railways. This was raised by Arun Jaitely in the Rajya Sabha in 2016, and a special committee was created to plan the unification of the two budgets.

The British government’s colonial-era policy, which was based on the Acworth Committee’s recommendations, mandated the presentation of a separate railway budget. When the first Railways budget was published in 1924, it required more money than India spent on all other administrative components put together.

Additionally, it served as a weapon to safeguard foreign investments, particularly British investments in Indian railways. Furthermore, the Indian Railways will no longer be required to pay the yearly dividend to the Government of India on the budgetary support provided each year, saving the financially strapped Railways around Rs. 10,000 crore annually.

The central government may reveal several new passenger-oriented railroad facilities in this budget. The Rail Budget may prove to be an effective election budget this time around, particularly in the states where elections will be conducted. The Center may make certain specific notifications for these states as a result of this. People from all socioeconomic groups have called for the reinstatement of subsidies, notably the one that allowed seniors over 60 to receive up to a 50% discount before the Covid-19 pandemic but has since been removed, in light of the strong results for Railways wages.

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