New Delhi: Union Finance Minister Nirmala Sitharaman, the country’s first full-time woman Finance Minister, will on Saturday present the second full budget of the Modi 2.0 government. (Click here for Union Budget 2020 coverage) Also Read - Union Budget 2020: All Eyes on Nirmala Sitharaman's Second Budget Amid Slowdown | 5 Things to Expect
Among various things to look forward in the Budget, which itself is keenly anticipated due to the ongoing economic slowdown, is various announcements related to Railways. What new trains will be announced, if there will be a fare hike/cut-all of this will be keenly looked forward to. Also Read - Nirmala Sitharaman to Present Union Budget 2020 in Lok Sabha Today; Major Announcements on Tax Exemption Expected
However, due to Railways’ importance, its Budget used to be a full-fledged one, separate from the Union Budget. It was only in 2016 that the Railway Budget was merged with the General Budget. Read on to know why. Also Read - Markets Recoil as Economic Survey Stokes Fiscal Slippage Fears; All Eyes on Union Budget 2020
Merger of Railway Budget with General Budget:
The practice of a separate Railway Budget had been in existence since 1924 before the Modi government, on September 1, 2016, announced the merger of the Railway and Union Budgets. The decision was based on the recommendations of a committee headed by then-NITI Aayog member Bibek Debroy as well as that of a paper, prepared separately be Debroy and economist Kishore Desai.
In a November 2016 press release through the Press Information Bureau (PIB), the Ministry of Railways stated salient features of the merger along with its benefits, which were as follows:
(1.) Ministry of Railways will continue to function as a departmentally run commercial undertaking;
(2.) Railways will have a separate Statement of Budget Estimates and Demand for Grant;
(3.) A single Appropriation Bill, including the estimates of Railways, will be prepared and presented by Ministry of Finance to Parliament and all legislative work connected therewith will be handled by Ministry of Finance;
(4.) Railways will be exempted from payment of dividend to General Revenues and its Capital-at-charge would stand wiped off;
(5.) The Finance Ministry will provide Gross Budgetary Support to Ministry of Railways towards meeting part of its capital expenditure;
(6.) Railways may continue to raise resources from the market through Extra-Budgetary Resources as at present to finance its capital expenditure;
(7.) A unified budget will help present a holistic picture of the government’s financial position;
(8.) The merger would facilitate multimodal transport planning between highways, railways and inland waterways; and
(9.) It will allow the Ministry of Finance greater elbow-room at the time of mid-year review for better allocation of resources, etc.
Accordingly, the Railway Budget presented by then-Railway Minister Suresh Prabhu on February 25, 2016, turned out to be the last full Railway Budget. The first common Budget was presented by the late Arun Jaitley on February 1, 2017. In fact, it was the first Union Budget to be presented on this date, after a decision was taken in this regard.
Earlier, the Union Budget was presented on the last working day of February.