Railway Budget to be or not to be....

                                       Railway Budget to be or not to be?

 A panel headed by   Bibek Debroy, a member of Niti  Aayog has suggested   the  practice of  a separate  railway budget  be discarded.   This   remedy   is worse than the disease. .

First,   It is said to help depoliticize the Railways .Even without it,   Suresh Prabhu has strongly resisted attempts to influence Railway decisions for political reasons. He has refused to announce new lines, new trains, etc., .  He has   introduced transparency in tendering.  

Secondly, It is also said   that this would help the Govt   take commercial decisions. There are two enemies who must be defeated if Railways are to take commercial decisions.    A separate Budget  is not one of them.

1.The Railway unions entrenched in a corrupt relationship with bureaucrats , will never allow reducing the staff cost from the current 53% of the Revenue to  at least 40% when  10% to 20% is the norm and  commercial viability  threshold  in  other  Railways . A news item on 28^th June says that CBI has filed an FIR against  41 TTEs who printed fake receipt books and collecting money and there was an agitation by SRMU protesting the FIR.

2. As the proverb goes, the cat that has tasted milk will hover around all the time. The bureaucracy which   has   made Railways their own empire with absolute freedom from accountability will not allow any change in the status quo. (   Remember   the Rs.10 crore scam of   Bansal’s nephew.) They  would even   expand   their empire solely   to serve their interests   (9 zones became 17  but  efficiency only decreased:  Debroy report ).

Thirdly,,   there is nothing to show that  customer service  would improve  if it became  a part of the Government.. If the budgets are merged, Railways   would move further into the Government instead of moving further away from the Government   .

Let Zones become corporations. Let manufacturing units compete with the private players in those sectors. Let them follow the standard commercial accounting practices. Let them lure investments.  Then Railway budget will become irrelevant and fall like a withered leaf gently.  Merging now is putting the cart before the horse.

Fourthly,, this merger is said to facilitate account reforms   Several  committees, from  Sarin (1985) to Debroy (2015) have recommended accounting reforms to understand  easily   the true financial state of the organization. The   power of the Railway Bureaucracy  can be measured by the fact that till today they have stalled all efforts to reform although  there is a Chartered Accountant as a Minister. Prabhu promised  zero based budgeting in this year. Has it happened?   . What is needed is   separation of Railway employee-Members from Railway Board, and a complete overhaul of the   Board by bringing in experts.

Fifthly, this merger can be done only at the cost of transparency and accountability.   Sadananda Gowda in his Railway Budget speech of 2014 said that out of 676 projects in 30 years, only 327 were completed. After spending the original estimate Rs 1,57,883 crore,  now the railway  needed Rs 1,82,000 crore to complete the rest.  Only one out of 99 new lines sanctioned in the last ten years has been completed. This kind of shocking revelation will never be made about Railways in the General Budget.  Debroy wants   only a paragraph for Railways in the General Budget.  Even the financial details would be relegated to a corner in small print in the annexure.

Besides, IR carries 822 crores passengers in a year.( 2014-15)  ). Because its decisions affect the people,   there are  expectations and curiosity  about the budget . It is certainly an engine of economic growth.. Railway’s annual revenue is projected to be Rs. 1, 84, 820 crores.  Only, U.P., A.P. and Maharashtra have higher budgets. IR needs special attention.

  Let us see  why  the  Railway Budget  was separated from  the General Budget  in the first place  .The Acworth Committee (  1921 ) wanted Railways to be run as commercial organization on sound business principle. (  Indian Railways-M. A. Rao  pp58-60 )  Then,  it  would   meet its needs from its own income,    from  outside the general revenues of the country,     Three more   committees   endorsed   this  .  Japan separated its Railway Budget from the Central Budget in 1919. A   Legislative Assembly   committee on 20^th September 1924 passed a resolution separating Railway budget from the General Budget. The Government   accepted this   and the Convention of 1924   came into force.  It recognized the railways as being   free to look after their own affairs and to function on “sound business principle” as a commercial undertaking, besides being a public utility.

 This must continue. Merging the budgets   and making it a mere department of the Government would take us back by a century to pre-1924 days.