Why getting rid of rail budget is Suresh Prabhu's best move
Amid the noise of the Goods and Services Tax and the debates surrounding it, the government has approved another major stepping stone to reforms.
Merging the railway budget, a practice that has been continuing for more than 90 years, with the finance budget would surely make the right noise in the Modi government's reforms roadmap.
In June 2015, the Bibek Debroy committee had submitted a slew of measures focused on restructuring the railway ministry, and getting rid of the railway budget was one of them.
Railway minister Suresh Prabhu then took the bold step of suggesting the scrapping of the railway budget to the finance minister, and the process has been set rolling.
The proposal has been accepted and a committee set up to ink out the modalities of the merger, so that when the finance minister presents his budget in February 2017, among other ministries, he would also include the railways in his speech.
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| The reason why a separate budget in the early 1920s was constituted is the same reason why it should now be merged. |
Strangely, the reason why a separate budget in the early 1920s was constituted is the same reason why it should now be merged.
What has changed is that, in the past nine decades, the rail budget gradually became a big piece of cookie for coalition partners to fight and negotiate for, whenever the numbers did not add up to a majority.
In the previous years, we have seen how regional heavyweights would corner the rail ministry portfolio, and then churn it up with abnormal project announcements, redraw zones and divisions, make a mockery of hiring processes and announce a line of new trains.
These new trains were ensured to pass through their chosen constituencies with absolute disregard for rolling stock and the strain it put on the systems.
To make matters worse, the rail budget, with the onset of electronic media, became more of a "television tamasha" with day-long discussions and an unruly Parliament (post the budget proposals), which consistently witnessed strong protests from members of states who presumed that the budget ignored their share of the cookie in terms of new trains.
Why at all then was the railway budget initiated? A brief snapshot from the history of 1920s tells us that the railways that time had owners from the state, to private operators to even the princely states.
Though it earned a decent chunk of revenue for the government, there was always neglect in terms of investment because the government always backed out whenever the economy faced a downturn.
It was proposed to segregate the railways, as that would provide it with the strengths of a separate entity and cater to its requirements in a more efficient manner.
Coming to the present day, we have a behemoth which employs the largest number of people in the nation but is riddled with huge requirement of investments - also, a rolling stock that needs replacement, addition of lines, conversion of lines, new technology and a safer equipment that transports India's millions daily.
The merger would help the railways get rid of dividend payments to the government on its investment and the pricing of services would be the responsibility of the finance minister.
Yes, it would still have the pressure of the populist demand to keep prices abnormally cheap, but at least the government of the day would have more control on it.
To a great extent, it would take away the opportunity of difficult coalition partners to bulldoze its way through the railway ministry and treat it as a personal fiefdom.
The railways at present does not need reform, it needs a vigorous shake up to give it a working future.
Beyond this, there are a host of other recommendations suggested by the Debroy committee which the ministry should focus on, rather than get busy for almost three months in carving out a please-all budget.
A small footnote. The recommendations speak of the railway ministry in the long run being merged with the transport ministry.
That's why I reiterate, for Prabhu to put forward such a proposal is a bold move; it will at least set the ball rolling in terms of the much needed reforms.
About scrapping of the railway ministry, it is something that should not be hurriedly done.