Finance ministry is considering the merger of rail and general budgets

The Union finance ministry has started examining railway ministry’s proposal to merge both the Rail and the General Budget, almost a century after they were separated.

"We will look at his (railway minister Suresh Prabhu's) proposal and examine it. It will have to be done in consultation with the railway ministry. That process has started," said finance secretary Ashok Lavasa.

It was in 1924 that the Rail and General Budgets were separated, after the British spun it off so that they focus better on India's most important infrastructure network. At that time, railways accounted for 70% of the total budget; however, now the Rail Budget stands for only about 15% of India’s budget.

When asked the timeline of the proposed merger, Lavasa said, "We can reach a conclusion only after we have considered the pros and cons of his (Suresh Prabhu's) proposal."

"This (merger) is something that has been suggested even in the past. So, one will have to consider what was the view taken in the past and why that view was taken," he added.

The burden of the huge revenue deficit that the Indian Railways suffers from, will be transferred to the finance ministry if the merger happens.

Railways minister Suresh Prabhu suggested the said merger in a recent letter to the finance ministry, stating that the already stressed Railways were facing an additional burden this year of Rs 30,000 crore because of the 7th Pay Commission.

However, the proposal from Prabhu’s side was made after it was suggested from a committee headed by NITI Aayog member Bibek Debroy.

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