What Led To The Merger Of Railway And Union Budget In 2017

The Union Budget and Railway Budget were presented separately until 2017 when the government ended the 92-year-old practice and merged them. Arun Jaitley presented the first combined Budget for the fiscal year 2017-18, and since then the practice has become a norm.

Finance Minister Nirmala Sitharaman will table her eighth Union Budget on February 1 for the fiscal year 2025-26. From tax reforms and incentives to expanding infrastructure, modernising the railway network, and major investments in the technology sector, the Budget covers it all.

History of the Railway Budget

The story of the separate Railway Budget goes as far back as 1924. It was presented a few days before the Union Budget following the recommendation of the Acworth Committee in 1920-21. 

The maiden Railway Budget post-Independence was presented separately by John Mathai.

Why was the Railway Budget merged with the Union Budget?

The decision to merge the Railway Budget with the Union Budget was made in 2016, following the submission of a white paper titled 'Dispensing with the Railway Budget' by the NITI Aayog Committee chaired by Bibek Debroy. The paper was presented to Suresh Prabhu, calling for an end to the decades-old practice.

Mr Prabhu subsequently raised the issue with Finance Minister Arun Jaitley, who later addressed it in the Rajya Sabha in 2016, leading to the eventual merger of the two Budgets. It was argued that the presentation of a unified Budget would help present a holistic picture of the financial position of the government.

It was decided that the Ministry of Railways will continue to function as a departmentally run commercial undertaking. A separate Statement of Budget Estimates and Demand for Grant will be created for Railways.

A single appropriation bill, including the estimates of railways, will be prepared and presented by the Ministry of Finance to Parliament, and all legislative work connected will be handled by the Ministry of Finance.

The merger of the Railway Budget with the Union Budget facilitated multimodal transport planning between highways, railways, and inland waterways and allow the Ministry of Finance greater elbow room for better allocation of resources.