Moneycontrol
Jan 11, 2017 08:59 PM IST IST | Source: Moneycontrol.com

Post Budget merger, what will FM have in store for Railways?

The proximate reason for the abandoning the 92-year-old practice of a separate railway budget from 2017-18 may have been hastened by the state-transportation giant's delicate balance sheet.

The government has approved plans to merge the railway budget from 2017. By making the railway budget a part India's main budget, the government has signalled its intent to walk the talk on freeing the state-owned behemoth from having to deal with stressed finances and political populism.

The proximate reason for the abandoning the 92-year-old practice of a separate railway budget from 2017-18 may have been hastened by the state-transportation giant's delicate balance sheet.

A combined budget could imply that the Indian Railways can avoid setting aside funds for dividends of about Rs 10,000 crore to the government every year.

Once the budgets are merged, the financial stress can be moved to the Centre's overall annual financial plan.

Railway Minister Suresh Prabhu has been arguing that a combined budget will allow a seamless national transportation policy, insulating the railways from political pressures.

Passengers may have to shell out more for travelling by train as the railway ministry may impose a specific cess on train tickets to fund the Rs 1.20 lakh crore safety fund-- Rashtriya Rail Sanraksha Kosh.

While fares for AC one-tier and two-tier are likely to see a marginal increase, passengers travelling on second class and AC three-tier could be hit harder because of a proportionately lower fare base.

An announcement on imposing a safety cess on train fares is likely to be announced in the budget for 2017-18
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