Railway Budget Separation: Why It Was Merged with Union Budget in 2017
On February 1, Union Finance Minister Nirmala Sitharaman will present the Union Budget for the upcoming fiscal year, outlining India’s financial strategy and priorities. The Union Budget, as it stands today, is a comprehensive document detailing India’s expenditure and revenue collection. However, this was not always the case. Before 2017, the Railway Budget was a separate entity, a practice inherited from colonial times. It was only in 2017 that then Finance Minister Arun Jaitley and Railway Minister Suresh Prabhu merged the Railway Budget with the Union Budget, marking a historic shift in India’s budgetary process.
The Railway Budget was separated from the Union Budget in 1924, following the recommendations of the Acworth Committee. This separation was intended to give the Indian Railways greater financial autonomy and focus on its development as a critical infrastructure asset. For over 92 years, the Railway Budget was presented a few days before the Union Budget, allowing it to function as a distinct financial entity.
In 2016, a NITI Aayog committee headed by economist Bibek Debroy, along with a separate paper titled ‘Dispensing with the Railway Budget’ co-authored by Debroy and Kishore Desai, recommended merging the two budgets. The committee argued that the separation had outlived its purpose and created unnecessary complications. Based on these recommendations, the Railway Budget was merged with the Union Budget in 2017, and Arun Jaitley presented the first combined budget that year.
The merger has had several positive outcomes:
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