Economic Highlights

New Delhi, 22 October 2010

Why Scrap Rail Budget?

NEED SEPARATE BUDGETS FOR ALL

By Shivaji Sarkar

The Finance Minister Pranab Mukherjee’s plan to scrap the separate Railway Budget needs to be seen as something more than a competition between the two Ministers. It is a battle of supremacy between two Ministries. The Finance Ministry always wants to have an upper hand. A separate Railway Budget has been anathema for years. Indeed, the suggestion has not come for the first time.

Arguably, this issue should be debated, whether there ought to be one consolidated presentation of the Budget or all Ministries should present their own budgets. In reality, despite presentation of the Central Budget, all Ministries present budgets of their departments separately even now --- but quietly. They do it as a subsidiary or explanatory function.

So why the hullaballoo about the Railway Budget? The Finance Minister is pushing for a single Budget also because the present custom of the Rail Budget being presented to Parliament by the Railway Minister, two days prior to the General Budget, is a pre-Independence practice as per the Separation Convention of 1924. “There is no Constitutional provision for a separate Rail Budget.”

The controversy, in reality, is not over the separate Budget but its presentation before the General Budget and the attention it gets. It is one thing that the entire nation awaits it. And every citizen is concerned about the rise and fall in fares or introduction of new trains.

True, the Constitution does not provide for everything but it has also accepted certain conventions. A separate Railway Budget has always fixed responsibilities on the Railway Ministers. Their performance is judged on the functioning of the railways. The Budget virtually has become their report card. It has also ensured a kind of transparency and leads to debate and discussion which Budgets of any other department has rarely done.

The railways get Central support of only Rs 15,000 crore. The rest of the Rs 97721 crore budgetary supports are generated by the railways themselves. Whatever plan support it gets, it refunds as dividend to the Government. Whereby, the railway is more like a corporate balance sheet. The Government is not spending on the expansion of railways. It is being done by the railways but it has to go through the vetting process of the Planning Commission.

Besides, the nation knows how railway funds are generated and spent. If some Minister has fudged figures, that is also public knowledge. Do not such things happen in other departments? Perhaps, but it does not come out in the open. In the overall discussion of the General Budget the minute scrutiny of allocations and expenditures of different departments get over-shadowed.

This calls for presentation of their Budgets in a detailed form so that there could be an open debate. Specially, as some of the departments and Ministries have budgets larger than that of the railways. But that is generally not public knowledge. The people also do not know how that money is spent or even utilised properly or not. The media too does not discuss these issues as they appear to be of less importance.

For instance, social services have a budgetary allocation of Rs 106887 crore, larger than the railways. It has rarely evoked a discussion. In reality, it should have been debated about the focus of its expenditures. Has anybody ever tried to look at its impact over the years? It has not gone through any open scrutiny.

Similarly, agriculture and allied activities have an annual budgetary provision of Rs 107813 crore in 2010-11. It has been reduced by Rs 58 crore this year. Has anybody discussed it? More so, at a time when the Government wants to double farm production to 4 per cent of the GDP from less than two per cent presently. Nobody has questioned why the allocation has been cut?

This is the advantage or disadvantage of not having a separate detailed agriculture Budget. It evokes no public attention. Had agriculture come as a separate Budget, it could have created uproar particularly at a time when food prices are soaring and the country is facing acute food shortage.

Likewise, the defence Budget has been reduced to Rs 91152 crore this year from Rs 92026 crore in 2009-2010. Some defence writers have written about this. However, nobody has questioned why it has been reduced at such a critical juncture when the country is facing a difficult security scenario. It has also not been scrutinised whether the Budget preparation of last year was appropriated or not.

Further, the Government shows a huge disbursement on the transport sector. But this has never been analysed properly. Questionably, if the Government has been spending so much on the transport sector, why has the basic transport infrastructure almost all over the country remained at a rudimentary level, barring some States?

The answer is not difficult to seek. The Government has included the Railway Budget expenditure as its own to inflate the figures. This year, it has presented disbursement to the transport sector at Rs 128740 crore. This includes Rs 97721 crore of the Railway Budget’s expenses. This has been going on many years. Plainly, the transport sector is actually allocated Rs 30000 crore which includes shipping, ports and light houses, civil aviation, roads and bridges, road transport, inland water transport and other transport services.

The allocation to shipping is Rs 36 crore this year, the same last year and Rs 32 crore in 2008-09. Shockingly, a country that dreams of becoming a sea power does not even spend enough to add a ship each year? Our entire shipping needs are catered by foreign liners. Its implication has never been discussed in detail because hardly anybody is aware of this.

This is what a General omnibus Budget does. It reveals less and conceals more. The World Bank and the International Monetary Fund demand the budgetary process be made more transparent. The Finance Ministry’ suggestion to club the Railway Budget would only defeat that purpose.

In sum, the country needs to evolve a system where each of the departmental budgets comes under public scrutiny. The Standing Committees of various Ministries have a limited role of checking the Budgets. But it cannot create the kind of transparency that separate Budgets of each department would lead to. ---- INFA

(Copyright, India News and Feature Alliance)