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<\/a><\/p>\n25\/2016 Railway Budget, a vanishing trick, writes K. Balakesari – The Hindu<\/p>\n
http:\/\/www.thehindu.com\/opinion\/op-ed\/railway-budget-a-vanishing-trick-writes-k-balakesari\/article9132602.ece?homepage=true 1\/2<\/p>\n
OPINION <\/span><\/span><\/span>\u00bb <\/span><\/span>COMMENT<\/span><\/span><\/span><\/p>\n September 22, 2016<\/p>\n Railway Budget, a vanishing trick<\/p>\n K. Balakesari<\/p>\n FILE PHOTO: PARTH SANYAL<\/p>\n WHISTLE AND LIGHT: \u201cThe government should table an annual \u2018Indian Railways Report\u2019 in Parliament on the lines of the Reserve<\/p>\n Bank of India\u2019s Economic Survey. That will signal reforms with transparency.\u201d Picture shows a heritage train in Kolkata.<\/p>\n Special Arrangement<\/p>\n K. Balakesari<\/p>\n The hurry to bury the standalone Budget points to obfuscation under the smokescreen of reforms<\/p>\n So finally, the almost century-old practice of presenting a separate Railway Budget ahead of the General Budget is to be dispensed with from<\/p>\n the next financial year (2017-18), and the <\/span><\/span>Railway Budget \u201cmerged\u201d with the General Budget<\/span><\/span><\/span>. The Union Cabinet has just cleared the<\/span><\/span><\/p>\n proposal.<\/p>\n What are the reported reasons for this merger? According to earlier media reports, a separate Railway Budget is being dispensed with so that<\/p>\n the Indian Railways need not pay the annual dividend to the Government of India on the budgetary support given each year, saving the<\/p>\n financially stressed Railways about Rs.10,000 crore annually; over the years, the Budget has been misused by politicians as a populist<\/p>\n platform to enhance their own image; no other Ministry has a separate budget and the practice exists in no other country today; the Bibek<\/p>\n Debroy Committee has recommended discontinuance of a separate Rail Budget and it is part of the Prime Minister\u2019s reform programme.<\/p>\n Besides, it is a colonial legacy.<\/p>\n A point particularly stressed by the Finance Minister in the press conference announcing the Cabinet decision was that the Railways\u2019 share in<\/p>\n the <\/span><\/span>General Budget has progressively reduced <\/span><\/span><\/span>over the years, making a separate budget an anachronism.<\/span><\/span><\/p>\n Each of these \u201creasons\u201d does not present the true or complete picture. It is necessary to separate fact from fiction.<\/p>\n 9\/25\/2016 Railway Budget, a vanishing trick, writes K. Balakesari – The Hindu<\/p>\n http:\/\/www.thehindu.com\/opinion\/op-ed\/railway-budget-a-vanishing-trick-writes-k-balakesari\/article9132602.ece?homepage=true 2\/2<\/p>\n It is a review<\/p>\n There have been sporadic calls in the past for doing away with a separate Railway Budget for various reasons, but the matter was never<\/p>\n pursued seriously. One of the more publicised reasons is that it will free the Railways of the obligation of paying the annual dividend, as<\/p>\n mentioned earlier. This is only partly true. The dividend is paid not only on the budgetary support extended during a year but also on the total<\/p>\n \u201ccapital at charge\u201d which includes the gross budgetary support (GBS) of previous years. By this merger, a \u201cloan-in-perpetuity\u201d is converted to<\/p>\n a grant. Shorn of officialese, it is a loan waiver; and loan waivers are granted to individuals or institutions in extreme financial distress \u2014<\/p>\n something not to go to town about.<\/p>\n In popular imagination, the Railway Budget was seen as a grand spectacle, with the Railway Minister using it as a platform for populism and<\/p>\n political grandstanding. What is not appreciated is that the Budget is not merely a statement of allotment of funds to various projects and<\/p>\n programmes, unlike other ministries, but comprises a fairly detailed performance review, physical and financial, of the previous year and<\/p>\n prospects for the current (Budget) year. Perhaps nowhere in the world is a political functionary called upon to present a financial report card<\/p>\n of the country\u2019s largest public undertaking in the full glare of publicity. A separate post-Budget discussion in Parliament on the Railways, as<\/p>\n indicated by the Finance Minister, is no substitute, as the focus most likely will be on allotments to various projects, not on financial<\/p>\n performance.<\/p>\n Talking of populism, the recent announcement by the Finance Minister of the proposal to set up a new Railway zone to placate a State<\/p>\n government as part of a \u201cspecial package\u201d is proof that it is possible to be \u201cpopulist\u201d outside a separate budget.<\/p>\n Why should there be a separate budget for the Railways? The fact is that the Railways is indeed unlike any other Central ministry in size and<\/p>\n scope: It is an operational ministry; it earns as well as spends, unlike other ministries that only spend. Its gross earnings (Rs.1.68 lakh crore<\/p>\n in 2015-16) are among the highest for any Indian organisation, public or private; it has a staff strength (13.2 lakh) that exceeds that of the<\/p>\n Indian Army; it fully meets the pension liabilities of its retired employees (13.8 lakh) out of its own earnings unlike other ministries; it follows<\/p>\n an accounting practice, though not up to the standards of a purely commercial establishment, that has a number of features of a<\/p>\n commercially-run organisation. So, if the Railways is to be treated like other ministries, will the government also fund its pension liabilities<\/p>\n which are estimated to be about Rs.45,500 crore in 2016-17? That should be some \u201csavings\u201d indeed!<\/p>\n Part of a package<\/p>\n Perhaps the most misquoted reason given for the merger is that the Bibek Debroy Committee has recommended it. That is being economical<\/p>\n with the facts. The committee has recommended it not as a stand-alone step, but as part of a slew of measures such as: complete overhaul of<\/p>\n the project financing architecture of the Railways involving ruthless weeding out of unviable\/long-pending projects; comprehensive<\/p>\n accounting reforms; separation of infrastructure and operations; and setting up of a rail regulatory authority. Pending these steps, each of<\/p>\n which is a major project in itself (some politically sensitive), the move to give a hasty send-off to the Railway Budget is perplexing.<\/p>\n The Railway Budget is indeed a colonial legacy; but so are English, the Railways, Rashtrapati Bhavan and the sedition law. Enough said. All<\/p>\n this is not to say that the Railway Budget is a holy cow that cannot be touched. Far from it. The question is not \u201cwhy\u201d, but \u201cwhy such a hurry<\/p>\n to bury it\u201d?<\/p>\n The answer, in one word: Obfuscation. By all accounts, the Railways\u2019 financial position is precarious due to the triple whammy of a fall in<\/p>\n revenues, a sudden spike in expenditure due to implementation recommendations of the Seventh Pay Commission, and an increasingly<\/p>\n unsustainable interest burden on market borrowings. A separate Budget would have meant having to openly declare an operating ratio in<\/p>\n excess of 1.0 (in layman\u2019s language, that means one is living beyond one\u2019s means): not a very good advertisement for a system that aspires to<\/p>\n have high-speed tilting Talgo trains shortly and Bullet trains in the not-too-distant future. So why not banish and \u201cvanish\u201d the Railway Budget<\/p>\n into anonymity as one of the myriad annexures in the General Budget and earn a fat \u201cbonus\u201d of about Rs.10,000 crore in the bargain? A smart<\/p>\n move indeed! It seems now the Budget is more valuable dead than alive. However, what should be a matter of serious concern to the aam<\/p>\n aadmi is that the Railways\u2019 finances are sought to be shored up, not by improving efficiency, increasing revenues and cutting costs, but<\/p>\n through a dexterous bureaucratic sleight of hand, taking cover behind the smokescreen of \u201creforms\u201d.<\/p>\n Finally, a suggestion to the government: Do not throw the baby out with the bathwater; table an annual \u201cIndian Railways Report\u201d in<\/p>\n Parliament on the lines of the Economic Survey prepared by the Chief Economic Advisor under the Ministry of Finance. That will signal<\/p>\n reforms with transparency.<\/p>\n K. Balakesari is former Member Staff, Railway Board.<\/p>\n Corrections & Clarifications:<\/p>\n The Economic Survey is prepared by the Chief Economic Advisor under the Ministry of Finance, and not by the RBI as<\/p>\n mentioned in the previous version of this article.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" \u0938\u0928 1924 \u0938\u0947 \u0905\u0915\u094d\u0935\u094b\u0930\u094d\u0925 \u0938\u092e\u093f\u0924\u093f \u0915\u0940 \u0938\u092e\u0940\u0915\u094d\u0937\u093e \u0938\u0947 \u0930\u0947\u0932\u0935\u0947 \u0915\u093e \u092c\u091c\u091f \u0905\u0932\u0917 \u0938\u0947 \u092a\u094d\u0930\u0938\u094d\u0924\u0941\u0924 \u0915\u093f\u092f\u093e… more