Cabinet approves merger of rail budget with general budget

The Union Cabinet has approved the proposals of Ministry of Finance on certain landmark budgetary reforms relating to the merger of Railway budget with the General budget, the advancement of the date of Budget presentation from the last day of February and the merger of the Plan and the Non-Plan classification in the Budget and Accounts. All these changes will be put into effect simultaneously from the Budget 2017-18. The Railways will continue to maintain its distinct entity -as a departmentally run commercial undertaking as at present; Railways will retain their functional autonomy and delegation of financial powers etc. as per the existing guidelines; The existing financial arrangements will continue wherein Railways will meet all their revenue expenditure, including ordinary working expenses, pay and allowances and pensions etc. from their revenue receipts; The capital at charge of the Railways estimated at Rs.2.27 lakh crore on which annual dividend is paid by the Railways will be wiped off. Consequently, there will be no dividend liability for Railways from 2017-18 and Ministry of Railways will get Gross Budgetary support. This will also save Railways from the liability of payment of approximately Rs.9,700 crore annual dividend to the Government of India;
The presentation of separate Railway budget started in the year 1924, and has continued after independence as a convention rather than under Constitutional provisions.
The merger would bring the affairs of the Railways to centre stage and present a holistic picture of the financial position of the Government. The merger is also expected to reduce the procedural requirements and instead bring into focus, the aspects of delivery and good governance. Consequent to the merger, the appropriations for Railways will form part of the main Appropriation Bill.