Know all you need to know about the the Rail budget 2016. You will get all the information about It’s history, purpose, its relevance and more …


Before we speak about the Budget and it’s significance, I would like to present few facts about the Indian Railways.

  • Indian Railways is one of the largest railways networks in the world and the largest railways network to be operated by a single Govt. It has been in operation for nearly 170 years, since April 16, 1851.
  • The first electric train ran between Bombay VT and Kurla in the year 1925.
  • Indian Railways owns the longest railway platform in the world at Gorakhpur, Uttar Pradesh with a length of 4,483  ft.
  • Indian railways still has the oldest preserved locomotive in working order, the Fairy Queen that was made way back in 1855. It is the oldest functioning steam engine in the world, which finds a place in the Guinness Book of World Records and got Heritage Award at the International Tourist Bureau, Berlin in March 2000.

 A few more facts as to why Railways play an important role in our day today affairs-

  • Within a short span of its going online, it had become the largest and the fastest-growing e-commerce website in the Asia-Pacific region, with about six lakh registered users as of 2013.
  • One out of five online users in India visits the Indian Railways site, with almost 12 million unique visitors monthly and majority of the traffic is seen between 10 am to 12 pm. 
  • About 11.57 lakh berths and seats are booked a day, out of which tatkal accounts for 1.71 lakh seats and berths on 2677 trains.
  • Tatkal booking yielded a revenue of Rs. 847 crore during 2011-12.
  • IRCTC receives a lot of flak for its slow, sluggish performance, server inability and low bandwidth. Currently, it is said to sell about 40-45,000 tatkal railway tickets between 10 am and 11 am (usually its 10 and 11, because all tickets are sold in one hour – in fact, 45 mins)
  • On an average, Indian Railways website receives over 4.15 lakh online booking daily and over 10 Lakh people Check PNR Status online daily.


But why do we need a separate railway budget?

The practice of separate Railway Budgets started way back in 1924 during the British rule in India. During those times, Railways was the largest industrial asset of the country and they used to occupy a significant share of the budgetary allocations (75 to 85 %). Since the Railways constituted such a large portion of the General Budget, it was recommended by the British officials to separate the Railways from the general budget solely for the purposes of better policy formulation and implementation.

However, with the various transport facilities made available, the Railways constitute just about 4% of the country’s total General Budget allocations. However, the culture of presentation of a separate Railway Budget, two days before the General Budget is still continued majorly for political gains. Railways are called the lifeline of the nation and it has been said that the Railways present the true picture of India. Indian Railways directly influence the life of millions of Indians.

With 1.6 million employees, the Indian Railways is among the world’s largest recruiting body. It has added about 360,000 staff in the past five years. It carries over 13 million passengers & 1.3 million tones of freight everyday. When an enterprise has an ability to create such a huge impact, it grabs the attention of everyone including the government and the politicians.

The politicians since independence have always cashed in on the Railways for political gains. A separate Railways budget allows them to announce trains, extension of routes etc. for a particular region/state and then take credit for the same. Therefore, even though the separation of Railways from General Budget may have been a necessary governance step at the time of introduction, it is now a tool for political gains.


The tradition of Railway Budgets:

The Railway Budget deals with planned infrastructure expenditures on the railways as well as with the operating revenues and expenditure for the upcoming fiscal years, the public elements of which are usually the induction and improvement of existing trains and routes, planned investment in new and existing infrastructure elements, and the tariff for freight and passenger travel. Policies and allocations are discussed upon by parliament, which is proposed in the budget. The budget needs to be passed by a simple majority in the Lower House that is lok Sabha. The comments of the Upper House that is rajya sabha are non-binding. Indian Railways is subject to the same audit control as other government revenue and expenditures. Based on anticipated traffic and the projected tariff, requirement of resources for capital and revenue expenditure of railways is worked out. While the revenue expenditure is met entirely by railways itself, the shortfall in the capital expenditure is met partly from borrowings (raised by Indian Railway Finance Corporation) and the rest from Budgetary support from the Central Government. Indian Railways pays dividend to the Central Government for the capital invested by the Central Government.

As per the Separation Convention (on the recommendations of the Acworth Committee), 1924, the Railway Budget is presented to the Parliament by the Union Railway Minister, two days prior to the general budget usually around 26 February. Though the Railway Budget is separately presented to the Parliament, the figures relating to the receipt and expenditure of the Railways are also shown in the General Budget, since they are a part and parcel of the total receipts and expenditure of the Government of India. This document serves as a balance sheet of operations of the Railways during the previous year and lists out plans for expansion for the current year.

The formation of policy and overall control of the railways is vested in the board of railway that is known as railway board, comprising the Chairman, the Financial Commissioner and other functional members of Traffic, Engineering, Mechanical, Electrical and Staff departments.


History of Rail Budgets:

  • In 1921, British railway economist, William Mitchell Acworth was appointed chairman of the Committee on Indian Railways. The report of the committee, known as the “Acworth Report”, led to reorganization of Indian Railways; thus separating the railway finances of India from the general government finances. In short, this led to creation of a separate Railway Budget, an arrangement that continues in independent India today.
  • India’s first Finance Minister, Sir R.K. Shanmugham Chetty, presented the first Finance Budget of independent India on November 26, 1947. It was a review of the economy and no new taxes were proposed as the budget day for 1948-49 was just 95 days away.
  • C. Neogy then took charge of the Finance portfolio and held that office for just 35 days.
  • John Mathai became the third Finance Minister of India presenting the budget for 1950-51, the first budget for the Republic of India.
  • The next Finance Minister, C.D. Deshmukh presented the first budget in the first elected Parliament on the basis of adult franchise.
  • Budget papers began to be prepared in Hindi from 1955-56. Initially, major attention was paid towards the agriculture sector but as the economy evolved, the focus shifted from agriculture to other sectors like industry and finance.
  • In 1959, Morarji Desai became the Finance Minister. After the fourth General Elections in 1967, Morarji Desai once again became the Finance Minister. This was his second time. He has presented ten budgets till date. They included five annual and one interim budget during his first stint and three final and one interim in the second tenure when he was both Finance Minister and Deputy Prime Minister.
  • After Desai resigned, Indira Gandhi, the then Prime Minister, took over the Finance portfolio.
  • The shortest ever interim budget speech was just 800 words and delivered by H. M. Patel in 1977.
  • Rajiv Gandhi presented the budget for 1987-88 after V P Singh quit his government, and in the process became only the third Prime Minister to present a budget after his mother and grandfather.
  • Yashwant Sinha became the Finance Minister and presented the interim budget for 1991-92.
  • In the election held in May 1991, the Congress returned to power and Shri Manmohan Singh became the Finance Minister. This was the first occasion when two ministers of two different political parties presented the interim and final budgets.
  • After the elections another non-Congress ministry assumed office.
  • So, a final budget for 1996-97 was presented by Shri P. Chidambaram of the then Tamil Maanila Congress. It was the second time that two ministers of different political parties presented an interim and final budget.
  • Following a constitutional crisis, the I.K. Gujral Ministry was on its way out, and a special session of Parliament was convened only to pass Shri Chidambaram’s 1997-98 budget.
  • In 2000, Mamata Banerjee became the first women Railway Minister of India. In the year 2002, she also became the first female Minister of Railways to present the Railway budget. She holds the record of being the only women who presented the railway budget for two different governments in the centre (NDA and UPA).
  • First live telecast of railway budget took place on 24 March 1994. Lalu Prasad Yadav, who remained Railways Minister from 2004 to May 2009, presented the railway budget six times in a row.
  • In 2014 railway budget, Railway Minister D. V. Sadananda Gowda announced the first railway budget, under the Modi regime.


Highlights of 2016-2017 rail budget

  • No hike in passenger fares.
  • Action has been initiated on 139 budget announcements made last year.
  • Eliminate all unmanned level crossings by 2020.
  • Swacch Bharat: 17000 biotoilets and additional toilets in 475 stations before the close of this financial year.
  • Increased quota for senior citizens and women travellers this year.
  • Wifi at 100 stations this year and 400 stations next year.
  • Enhanced capacity of e-ticketing system from 2,000 tickets/min to 7,200/min. Supporting 1.2 lakh concurrent users now, as opposed to 40,000 earlier.
  • All major stations to be brought under CCTV surveillance in a phased manner.
  • Deen Dayal coaches for long distance trains for unreserved passengers. These coaches will include potable water and higher number of mobile charging points.
  • IRCTC to manage catering service in phased manner. Local cuisine of choice will be made available to passengers.
  • Cleaning of toilets by requests through SMS.
  • Children’s menu, baby foods, baby boards to be made available for travelling mothers.
  • GPS-based digital display in coaches for showing upcoming stations.