The British rulers of India decided to have a separate budget for railways because they used the rail infrastructure to reach all corners of the country to facilitate control over India and the plunder of its resources.
Even after Independence, India has continued with the practice of a separate railway budget being presented to Parliament every year. Perhaps no other country in the world indulges in this ritual. In no other Parliament will you see a minister, sounding like a bad geography teacher, reading out for an hour hundreds of place names she cannot even pronounce. That does not mean that railway infrastructures in other countries have not grown or not been modernized.
Politicians, of course, will not want to do away with the practice. Where else would they get such a platform to talk about things like "aalo dum", "chai kulhads" and water bottles?
It also gives them a great opportunity to make grand announcements like "railways will not be privatized", as Mamata Banerjee did during her budget speech on Wednesday. If the private sector can be involved in something as crucial as electricity, why should the country be averse to the involvement of the private sector in the railways?
As for changes in fare and freight rates, these do not need to be presented to Parliament because they do not need its approval. They can be announced the way changes in oil prices are announced or the way telecom companies announce changes in tariff.
It's high time India started treating the railways in the same way as any other utility rather than something that is used by politicians to distribute "goodies". If we need a separate budget at all, why not have a water budget or a food budget?
Let us break with the archaic practice It has taken 86 years since the practice of presenting a separate Railway budget began and over half a century after the British left the shores of this country to question this legacy. The Constitution prescribes that a statement of the estimated receipts and expenditure of the government of India shall be laid before Parliament every year. Railways is not an exception to this requirement. Surely, it is not anybody’s case that Railways is not a part of the government. It is in compliance of this constitutional requirement that the annual financial statement, popularly known as the Union Budget, placed before Parliament also includes the receipts and expenditure of the Railways. There is no justification that the British practice of separating the Railway budget from the Union Budget should continue merely because running trains is a commercial activity. Nor can the size of the Railways’ receipts and expenditure be a relevant consideration. If the commercial nature of the operations or the size of the receipts and expenditure is the criteria, then defence, posts and telegraph and telecom should have separate budgets too. Those who are in favour of continuation of the current practice will argue that Railways is an important activity and deserves special attention of Parliament. Some others might say that merging the Railway budget with the Union budget will compromise the independence of the railway ministry. This does not cut ice and can easily be overcome within the existing framework. What is more important is the integrity of the budgetary process of the government as a whole and not a fragmented view currently available. A comprehensive view of the central finances, including a total picture of the government’s assets and liabilities, is essential. We have done away with the tradition of presenting the budget at 5:00 o’clock in the evening. Then why should there be hesitation in doing away with the tradition of a separate railway Budget? Railway finances should also be brought within the purview of the fiscal responsibility and budget management legislation. Let the debate begin.
Against:
But it leads to better focus on the service A separate Railway budget, a brainchild of Acworth committee, was a historic necessity that freed the commercial undertaking from the government system. The arrangement was reviewed by at least two committees, but no major change was suggested, except to evolve a national policy for the Railways. No government system should dilute the essential ingredients of checks and controls vital for public finances. For Railways, no such aberration had taken place by this emancipation of the ministry from the finance department, as Indian Railway Accounts Service discharged the responsibility of comprehensive and integral management of railway finances. Path-breaking decision of devolution of powers, financial flexibility, autonomy and freedom to Railway Board was expected to result in expansion and modernisation. Railways did achieve this with balanced distribution of resources for rehabilitation and replacement (through Depreciation Reserve Fund), expansion and justified connectivity (through Capital Fund) and essential amenity works (through Development Fund). The setting up of Special Railway Safety Fund to overtake the arrears in replacements and renewals in a time-bound manner through government grant and safety surcharge proved the merit of the special status. Was the system capable of withstanding challenges posed by external factors? When the economy was booming, this crucial infrastructure sector rose to the occasion, thanks to its autonomy. Through a slew of measures encompassing technical innovation, commercial response and dynamic managerial strategy, the challenge was met well. Critics may question its relevance in a globalised scenario, which had dented the monopoly edge of government-owned Railways. The business models should have a market focus supported by new processes in planning, reporting and performance assessment. Besides, there should be a ready tool for smooth separation when domains of public-private partnerships are explored. Can there be a more effective device to meet these requirements than a separate Railway budget, which puts this entity under Parliament scanner and watchful public?
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