Railways to function as a commercial undertaking

Railways will continue to function as a department run commercial undertaking and a separate statement of budget estimates and demand for grant will be created for the national transporter after the merger of Railway Budget with the Union Budget from the fiscal 2017-18, Lok Sabha was told today.
The merger of Railway Budget with General Budget is based on the recommendations of the committee headed by NITI Ayog Member Bibek Debroy and a separate paper on 'Dispensing with the Railway Budget' by him along with Kishore Desai, said Minister of State for Railways Rajen Gohain in a written answer.
He said a committee with representatives from Ministry of Finance and Ministry of Railways examined the issues involved and worked out the procedural details.

A single Appropriation Bill, including the estimates of Railways, will be prepared and presented by Ministry of Finance to Parliament and all legislative work connected therewith will be handled by Ministry of Finance.
Railways will get exemption from payment of dividend to General Revenues and its Capital-at-charge would stand wiped off.
Finance Ministry will provide Gross Budgetary Support to Railways towards meeting part of its capital expenditure and the national transporter may continue to raise resources from market through Extra-Budgetary Resources as at present to finance its capital expenditure.

There will be no dividend liability for Railways from 2017-18 while Railways continue to get GBS for capital expenditure. This will save Railways from the liability of payment of approximately Rs 10,000 crore as annual dividend to the government after adjusting the subsidy in payment of dividend would give a net benefit of about Rs 5000 crore to the Railways.

Gohain said the presentation of a unified budget will help present a holistic picture of the financial position of the government and merger of Rail Budget with Union Budget would facilitate multi-modal transport planning between highways, railways and inland waterways.
It will allow Ministry of Finance greater elbow-room at the time of mid-year review for better allocation of resources.