Budget 2018: Why India merged Railway, Union Budget in 2017
Budget 2018: Why India merged Railway, Union Budget in 2017 on Business Standard. Know why railway budget and union budget of India merged on Sept 2016. Find latest news on budget 2018 and highlights on Union Budget 2018.
Budget 2018 On 21 September 2016, Government of India approved the merger of the Railway Budget with the Union budget of India, and thus came to end — a 92year-old practice of separate rail and general budgets. The decision of merger was taken along with advancing the date of the Union Budget in the Parliament under the process of budgetary reforms taken up by the government. Earlier, NITI Aayog (National Institution for Transforming India), which constituted a committee headed by economist and NITI Aayog member Bibek Debroy, produced a whitepaper and recommended that the British-era practise should be phased out. The recommendations were forwarded to the Railway Ministry, after which former railway minister Suresh Prabhu, in a letter, urged Arun Jaitley to merge the Railway Budget with the general budget for the long-term interest of both the railways and the country’s economy. After raising the matter in the Rajya Sabha, Finance Minister Arun Jaitley constituted a committee to chart out the future course of action. The practice of a separate Railway Budget was started by the British in 1924 under the recommendation of a 10-member Acworth Committee headed by British economist William
Mitchell Acworth in 1920-21. Then the country’s gross domestic product (GDP) mostly depended on railway's revenue, in fact, then the Railway Budget was 84 per cent of the general budget. But over the years, the size of the rail budget diminished in comparison with the general budget. In the past, every year the Railway Budget was presented in the Parliament by the Railway Minister few days prior to the general budget. On 25 February 2016, Suresh Prabhu became the last railway minister to present a separate Railway Budget in the parliament. Next year on 1 February 2017, Arun Jaitley became the first Finance Minister to present a combined railway and general budget. Reasons for Merger of Railway Budget with Union Budget (Observations of NITI Aayog) The NITI Aayog committee headed by Bibek Debroy noted that a separate Railway Budget was just an annual ritual that should be done away with. The report stated that as the size of the Railway Budget has shrunken when compared to the overall general budget, presenting the Railway Budget separately is not required. The report further stated that India is the only country in the world with a separate Railway Budget. In fact all the countries that Acworth Committee report mentioned had separate Railway Budget but have discontinued the practice.
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