No more Rail Budget? Niti Ayog note to PMO terms it as ‘failed’ exercise

No more Rail Budget? Niti Ayog note to PMO terms it as ‘failed’ exercise

NITI Aayog argues in favour of scrapping the exercise, NDA govt seeks Railway Ministry’s views.

Rail Budget, Suresh Prabhu, NDA government, Railway Ministry, NITI Aayog, India news
This February’s Rail Budget, presented by Railway Minister Suresh Prabhu, may have been the last. (Express Photo)

This February’s Rail Budget, presented by Minister Suresh Prabhu, may have been the last.

The NDA government has sought the Railway Ministry’s comments on a 20-page note sent by NITI Aayog to the Prime Minister’s Office (PMO), arguing in favour of doing away with the high-profile annual exercise.

The note, titled “Dispensing with the Rail Budget” and jointly authored by Aayog member and economist Bibek Debroy and Kishore Desai, Officer on Special Duty, argues that the exercise had failed to be of use to the sector and become a “mechanism to announce popular measures”.

Rail Bhawan sources said that the Department of Economic Affairs, the Finance Secretary and the Cabinet Secretary will also be part of ongoing deliberations on this issue.


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The Aayog note, which was examined by The Indian Express, proposes that a team comprising officials from the Ministry of Finance and members of the Railway Board be formed to work out a roadmap for the future.

Sources said that the proposed move was aimed at bringing more reforms to the sector by making Railways more “agile and efficient”.

The note refers to the first time Railway finances were separated from the general budget in 1924, under British rule, and argues that over the years it failed to tackle the problem of under-investment.

“The Railway Budget became a mechanism to announce popular measures, new trains, new routes, new rolling-stock manufacturing factories etc., with no concomitant focus on addressing Railways’ structural requirements, implementation of the ‘grand’ announcements, or funding needs,” states the note.

It argues that except for the past year’s financial results, a typical Rail Budget can be declared through annual reports, outcome statements and vision documents or policy announcements, as is being done by other ministries. “The Railway Budget has, in fact, led to ‘more Government’ without any increase in ‘Governance’,” states the note.

It makes out a case against the exercise, stating that the Railway Act of 1989 grants the “Central Government” the power to change tariffs without consulting Parliament and that Railways’ performance was included in the General Budget.

“Many committees have, in the past, recommended this (doing away the with Rail Budget). Even the Bibek Debroy committee report (on Railway restructuring and resource mobilisation) recommends this as one of its measures. Perhaps because Rail finances are not as big as they used to be in 1924, when they were separated… now, in fact, it’s smaller than the Defence Budget. In any case, no decision has been taken, and a decision will not be taken overnight,” A K Mital, chairman, Railway Board, told The Indian Express.

The Aayog’s note acknowledges that without the Rail Budget, the Railway Minister’s political stature may diminish and that the ministry would probably lose its primacy of place in government.

But it argues that having a separate Rail Budget does not automatically imply prioritised allocation of government resources towards the sector. Similarly, it says, not having a separate Rail Budget would not imply a reduced importance for Railways.

“However, an action that helps reduce the visibility of Railways in terms of media attention will actually be a real reform, as then many critical areas would possibly cease to be hostage to political compulsions,” states the note.