Cabinet approves Union Budgets and Railway

Budgets approval
The government of India broke the 92 years old rule in
a sweeping reform by announcing the merger of the
Union Budget and the Railway Budget and advances
the date by a month. This move will allow the various
departments of the government to kick start from the
very first day of the financial year. Currently the
budget takes place on the last working day of the
February and gets passed in the budget session of the
parliament. However, the government departments
get fund approval only in the first week of May. This is about to changed under the
new practice.
In the present scenario, the railway budget happens separately and has its own
income and expenditure. It is presented separately in the parliament. The
government has various departments and the outlay of the defence and infra is
much bigger than the railway outlay. Therefore the government felt that there is no
need for a separate railway budget as defence and infra is a part of the Union
budget itself.
Over time, many committees have recommended putting away the rail budget,
reasoning it did not serve any purpose while politicizing the process, making fares
almost impossible to raise as well as using the railways as a vehicle to dispense
patronage.

While commenting on this new development railway minister Suresh Prabhu said
in an interview that this is one of the biggest reforms in the history of Indian

railway sector. It will continue to maintain its autonomy and has proposed to set
up independent regulator which will be another part of the reform. All these
changes are expected to go well for the Indian railway. The railway minister also
highlighted that the railways will save Rs 9700 crore as it does not as it does not
have to pay dividend to the Central government.
The government has not decided on the roughly Rs 30,000 crore social burden of
the railways that stems from providing cheap fares accompanied with the
subsidized freight. The government does not see any impact on the general budget
and the fiscal deficit as expenses of railway will continue to be met by revenue. The
railways expect Rs 40,000 crore hit on account of Seventh Central Pay Commission
award.
However, this is a good move and the government led by the Prime Minister
Narendra Modi and Finance Minister Arun Jaitley is taking practical approach to
bring about much needed reforms in the railway sector.
This move will not impact the railway manufacturers like Titagarh Wagons
(Titagarh Wagons share price trading at Rs 121.40 apiece on NSE), Kalindee Rail
(Kalindee Rail share price trading at Rs 116.85 apiece on NSE), Texmaco Rail
(Texmaco Rail share price trading at Rs 113.00 apiece on NSE) etc since it is just a
policy move.

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Article Written by
Nabarupa Kanjilal