scorecardresearch
Budget 2021: Why was Railway Budget merged with Union Budget?

Budget 2021: Why was Railway Budget merged with Union Budget?

Budget 2021: The NITI Aayog committee in its recommendations had said that preparing and presenting a separate Railway Budget was just an annual ritual and it should be done away with

Budget 2021 Budget 2021

In 2017, the Central Government had merged the Railway Budget with the Union Budget, thus ending a practice that had started in 1924 when the country was under British rule. The British era practice of separately presenting the Union Budget and the Railway Budget was done away after a recommendation via a white paper from a NITI Aayog committee, whose members included Bibek Debroy and Kishore Desai.

The recommendations were sent to the then Railway Minister Suresh Prabhu; after which Prabhu wrote a letter to then Finance Minister Arun Jaitley urging him to merge the Railway Budget and the Union Budget for the long-interest of the Indian Railways and the country's economy. Jaitley then raised the issue in Rajya Sabha in 2016 and a committee was created to plan out the further course of action for merging the two budgets.

The NITI Aayog committee in its recommendations had said that preparing and presenting a separate Railway Budget was just an annual ritual and it should be done away with. They argued that over the years the size of the Railway Budget had shrunken significantly compared with the Union Budget, and thus presenting a separate budget for Railways was not required. The British had separated the Railway Budget in 1924 as a major part of the government revenues and the country's Gross Domestic Product (GDP) was significantly dependent on the revenues generated from the Railways. However, that changed over the years.

India was the only country in the world where the Railway Budget was presented separately from the Union Budget. In 2017, Late Arun Jaitley became the first Finance Minister to present a combined Union Budget in the Parliament. The same practice has been followed ever since. On February 1, 2021, Current Finance Minister Nirmala Sitharaman will present a combined Union Budget to the Lok Sabha.