7 questions you wanted to ask about Rail, Union Budget merger

Moneycontrol BureauThe Finance Ministry on Wednesday accepted the NITI Aayog member Bibek Debroy-initiated and Railway Minister Suresh Prabhu-backed proposal to merge the Rail and General Budgets. Here’s a quick take on the likely benefits and drawbacks of the merger.  

What will be the procedural differences? The requirement of separate Appropriation Bills that authorizes the government to spend or set money aside for specific spending and Vote on Account will cease to exist. It has removed classifications for expenditure. 

Does it provide any monetary relief to railways? It rids the railways of the annual dividend obligation towards the capital charge or return on investment to the Central government for funding capital investments.

Does this mean railways lose all power? Not really. Railways will likely continue to retain its functional autonomy as a distinct entity.

Will it make fares cheaper or dearer? With the merger any decision on passenger fares now rests with the Finance Ministry. Similarly, decisions on new train routes and additional stops on existing routes will also lie with the finance ministry. Will there be vote bank politics?Thankfully, no. No railway minister can now introduce a train or special services favouring the city or town he hails from.

Will common man continue to enjoy concessional benefits? Brace for certain changes as there are proposals to provide concessions based on Aadhaar number to make sure benefits are channelled to the right customers.  

Are there any drawbacks? Railways might lose out on the ease of raising capital funds through extra budgetary sources like institutional investors and pension funds.