Will Railway Budget 2025 Be Presented Separately?

On February 01, 2025, Union Finance Minister Nirmala Sitharaman will present the Union Budget, which outlines the country’s financial strategy. However, the structure of the Union Budget wasn’t always as we know it today.

The Railway Budget Before 2017 

For many years, the Railway Budget was separate from the Union Budget. This system started in 1924 after recommendations from the Acworth Committee during the colonial era. For decades, the Railway Budget was presented a few days before the Union Budget.

Why Was the Railway Budget Merged? 

In 2016, a committee led by Bibek Debroy from NITI Aayog, along with a separate report, suggested merging the Railway Budget with the Union Budget. This recommendation was based on the idea that a unified budget would be more efficient and better aligned with India’s modern financial goals.

What Changed After the Merger? 

When Finance Minister Arun Jaitley presented the combined Union Budget in 2017, several changes were made to how the Railway Budget functions:

1. Railways as a Commercial Undertaking: The Ministry of Railways continues to operate as a departmentally-run commercial entity.
2. Budgetary Changes: A separate Statement of Budget Estimates and Demand for Grant is now created for Railways, but all legislative work, including the Appropriation Bill, is handled by the Ministry of Finance.
3. Dividend Exemption: Railways no longer need to pay dividends to the government, and its capital-at-charge is cleared.
4. Budgetary Support from Finance Ministry: The Ministry of Finance allocates part of its budget to the Ministry of Railways for capital expenditure.
5. Extra-Budgetary Resources: Railways can still raise money from external sources to fund its capital projects.
6. Unified Financial Picture: A single budget provides a more comprehensive view of the government’s financial position.
7. Multimodal Transport Planning: The merger enables better coordination between railways, highways, and waterways for smoother transportation planning.
8. Better Resource Allocation: The Finance Ministry has more flexibility in allocating resources effectively during mid-year reviews.

By merging the Railway Budget with the Union Budget, the government can present a clearer and more holistic financial picture while ensuring better planning for the country’s infrastructure and transportation needs.

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