Debroy report details rail Budget overhaul

Apart from recommending it be merged with the general one and how to go about it

The NITI Aayog has not only recommended merging of the railways Budget with the government’s general Budget but also a complete overhaul of the manner in which the former are framed, to smoothen the merger.

Prepared under member Bibek Debroy, it has suggested the Gross Budgetary Support the Centre gives to the railways be transferred after subtracting the dividend the latter annually pay to the government. Indian Railways (IR) is among the very few government departments which pays a dividend in return for budgetary support.

In 2015-16, it paid a dividend of Rs 8,495 crore to the government, Rs 2,315 crore less than the Budget Estimate for that year. For 2016-17, the dividend is pegged by IR at Rs 9,731 crore, assuming the rate remains four per cent. This is an increase of Rs 1,236 crore from the revised estimate of 2015-16.

The Debroy report said pending capital-at-charge should be wiped off. On pension liabilities, another important component of the rail budget, the report does not say much on how to deal with it.

On the subsidies IR gives commuters and its customers by way of tickets at lower rate, etc, the report says this should be borne by both the finance and railways ministries. In a proportion on the basis of a mechanism to be worked out after the two budgets are merged. The railway budget document presented this February did not give a separate figure for the social service obligation. It said revenue forgone on passenger and freight service due to concessions and rebates was Rs 1,975 crore in 2014-15.

IR’s net revenue is to be computed as a surplus and a portion of that should be transferred to the Railways Capital Fund (RCF). The rest should be merged, says the report, with the Consolidated Fund of India. All past accruals to the RCF to be retained.

Rate fixation for passengers and freight could be done by the government, after due consultation with the proposed regulator, without needing Parliament approval.

“The Union Budget could have a separate section on IR financials, with past year performance, proposed revenues, working expense and annual plan for capital works, similar to what is being done for other departments,” the report said.

It added NITI Aayog’s proposed 15-year vision document would have one for railway sector development in the coming years, a map on how the sector should move. This would be prepared with the railways ministry and other important stakeholders.