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Sep 22 2016 (7:34AM)  Understanding the rationale behind rail, general budgets' merger (www.thehindu.com)
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Rail Budget

News Entry# 280844     
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Posted by: rdb*^  123711 news posts
What prompted the government to take the decision now? How does an early budget help? Here are the answers.
Ending a 92-year-old tradition, the Union Cabinet on Wednesday decided to merge the Railway budget with the General budget and agreed in principle to advance the date of its presentation in Parliament.
Why is the Rail budget presented separately in the first place?
Railway historians
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more...
say that it was during the British rule — in the early 1920s — that on the basis of the report of the Acworth Committee, railway finances (those of government-owned railway companies) were separated from the general finances.
The first Railway budget, under the system, can be traced to 1924.
Why change now?
The move to discard the Rail budget is said to be part of the Modi government’s reform agenda. The NITI Aayog had suggested this merger as the Railway budget was being used to dole out favours by way of new trains and projects.
This merger is also a part of the government advancing the budgetary exercise so as to complete it before March 31 and facilitate the beginning of expenditure on public-funded schemes from April 1.
How is it beneficial?
The merger will help the Railways get rid of the annual dividend they has to pay for gross budgetary support from the government every year. Sources say that the merger will help the cash-strapped Railways save about Rs 10,000 crore annually.
Railway Minister Suresh Prabhu said the merger of rail and general budgets will not impact the functional autonomy of the railways but help in enhancing capital expenditure. It would help the Railways raise extra capital expenditure that would allow them to enhance connectivity in the country and boost economic growth.
How does an early budget help?
An early presentation of budget will ensure that all legislative works are completed before the beginning of the new fiscal, from April, and help in funds allocated to various ministries flowing in from the first quarter.
Sources said the government planned to convene the Budget Session of Parliament before January 25, 2017, present the pre-Budget Economic Survey a day or two before the Finance Minister reads out the budget on February 1.
The advance estimates for the GDP will now be made on January 7, instead of February 7, and mid-year review of expenditure by various ministries is proposed to be completed by November 15.
The idea is to get the budget passed by Parliament, along with the Appropriation Bill and the Finance Bill, before March 24, so as to ensure the implementation of the budget proposals from April 1.
Keywords: General budget, Railway budget, Suresh Prabhu, budget merger
  
Sep 22 2016 (7:10AM)  Nitish flays Union Cabinet decision to scrap separate Railway Budget (www.thehindu.com)
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Rail Budget

News Entry# 280832     
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Posted by: rdb*^  123711 news posts
Former Railway Minister and Bihar Chief Minister Nitish Kumar on Wednesday criticised the decision of the Union Cabinet to scrap a separate railway budget and merge it with the general budget which, he said, would end autonomy of the largest public carrier in the country.
Making a strong point against ending over nine-decade old tradition of presentation of separate Rail Budget in Parliament, he asked the NDA government at the Centre to rethink its decision.
The Union Cabinet on Wednesday approved advancing presentation of the annual budget by a month, scrapped over nine-decade
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old tradition of having a separate Railway Budget and removed classifications for expenditure to make the exercise simpler.
“Based on my personal experience as Railway Minister I can say the decision will have no benefit,” said Mr. Kumar, who was Railway Minister during the NDA government of Atal Bihari Vajpayee
“It seems the Railways is not on priority of the NDA government at the Centre...this step would end autonomy of the Railway,s” he told reporters emerging from a press conference on International Sikh conclave.
The Railways is means of transportation of poor people who have unbreakable faith on the largest public transporter, he added.
“Common man has faith on the Railways which would be dented by this decision,” Mr. Kumar said.
Presentation of a separate Railway Budget has been a tradition which all successive governments followed earlier, he said.
Counting virtues of a separate Railway Budget, Mr. Kumar said the dividend paid by the Railways to the government is decided by Parliament.
Attraction of MPs for the Railway Budget was so deep that I have seen Parliament deliberating the entire night on the Rail Budget, he said. - PTI
  
Sep 22 2016 (7:08AM)  Plan to complete budget exercise before April 1 (www.thehindu.com)
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Rail Budget

News Entry# 280831     
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Posted by: rdb*^  123711 news posts
The unified budget, the Union Cabinet decided on Wednesday, would be presented a few weeks earlier than the convention of the last day of February. The date of presentation of the budget for 2017-18 would be fixed keeping in view the schedule for the Assembly elections to be held in States next year, Finance Minister Arun Jaitley told journalists.
The new date will be announced after obtaining approvals from the Cabinet Committee on Parliamentary Affairs and the Lok Sabha Speaker, an official said.
The decision to advance the budget is being taken to
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allow for the annual budget exercise to be completed every year before April 1, the start of the new financial year. This is expected to lead to streamlined spending of allocations by States and ministries and ensure rollout of the legislative changes in the tax regime from the beginning of the financial year. It will also preclude the need for seeking appropriation from Parliament through ‘Vote on Account.’
To reduce the bias in favour of Plan expenditure by both the Centre and the States, which, an official release said, has led to a “neglect of essential expenditures on maintenance of assets and other establishment-related expenditures for providing essential social services”, the Cabinet also approved the elimination in the Budget and the government’s Accounts of the Plan and Non Plan distinction.
The bifurcation of expenditure was resulting in a “fragmented view of resource allocation to various schemes, making it difficult not only to ascertain cost of delivering a service but also to link outlays to outcomes,” the release said.
The Railways will continue to maintain their distinct entity and retain its functional autonomy and delegation of financial powers, Railway Minister Suresh Prabhu told the media briefing. He said the Railways will continue to meet all their expenditure, including ordinary working expenses, pay, and pensions from their revenue receipts.
  
Sep 22 2016 (7:08AM)  It’s a ticket to privatisation: Ex-Rail Ministers (www.thehindu.com)
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Rail Budget

News Entry# 280830     
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Posted by: rdb*^  123711 news posts
It will become just another department to be toyed with rather than being used for public good, says Dinesh Trivedi
The end of autonomy and a move towards privatisation were some of the conclusions that were drawn by former Railway Ministers Nitish Kumar and Dinesh Trivedi over the Union Cabinet’s decision to merge the Railway and Union budgets.
Mr. Trivedi said the merging of the budgets could be the first step towards privatisation of the Railways, stating that whatever the merits of the measure, the move smacked of unilateralism.
“This
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was an issue that should have been discussed in Parliament as the separation convention that demerged the two budgets in 1924 had been brought in through legislative means. To say that the measure is a blow against colonialism is neither here nor there. Our entire political system is based on the Westminster model and our statute book awash with colonial laws. We could have scrapped all those as well,” he said.
“The separation convention was set up in 1924 as the Railways were seen as a commercial activity funded by the British government and dividends were to be paid to shareholders. The designation of the Railways as a commercial activity is still there. Does the scrapping of the separation convention mean that it will see a generational change for the Railways, or that the man sitting in Buxar, needing rail connectivity know what is the process he will have to go through?” he said. “It is a move that would gladden the heart of the Railway Minister, who can pass on his pressures to the Finance Minister, and in my view it will pave the way towards privatisation, as it will become just another department to be toyed with rather than being used for public good,” he said.
Bihar Chief Minister Nitish Kumar, who was Railway Minister under the premiership of Atal Bihari Vajpayee, said the decision would end the “autonomy” of the largest public carrier in the country. His deputy in the Cabinet Tejaswi Yadav too charged that it was a privatisation move.
“With my personal experience as a former Railway Minister I can say this decision of the Union Cabinet will not benefit the Railways. Instead, this step will end its autonomy,” said Mr. Kumar, while seeking a rethink.
A tradition for long
He said presenting a separate budget for the Railways had been a tradition which all successive governments followed. “The Railways have been the cheapest mode of transportation for the people of the country but with this decision of the Union government the faith of the common people in it will be dented,” he said.
Mr. Tejaswi Yadav said, “In future the Railway Ministry will cease to exist.”
His father and RJD chief Lalu Prasad Yadav too has been the Railway Minister. “During my father’s tenure, the Railways had earned huge profit but see the situation today,” he told journalists.
‘This will gladden the heart of Railway Minister who can pass on his pressures to Finance Minister’
  
Sep 22 2016 (7:07AM)  Centre decides to do away with separate rail budget (www.thehindu.com)
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Rail Budget

News Entry# 280829     
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This is a new feature showing past edits to this News Post.

Posted by: rdb*^  123711 news posts
Finance Minister to make unified presentation, move aimed at ending populism
With the ambition of putting an end to the populism that had come to be associated with it in the last few decades, the Union Cabinet has decided to bring the curtains down on the 92-year-old tradition of presenting a separate Rail Budget. It has been decided to merge the Rail Budget and the General Budget.
Consequently, Railway Minister Suresh Prabhu will not present it for the year 2017-18. Instead, Finance Minister Arun Jaitley will present a “unified” budget.
The
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decision, taken on the recommendation of a NITI Aayog committee headed by its member Bibek Debroy, reflects the decrease over time in the relative size of the Rail Budget compared to some of the other components in the General Budget, such as defence and roads & highways, reducing it to a mere “ritual”, Mr. Jaitley told a media conference after the meeting.
Aim of reform
Officials said the reform was intended to “deglamorise” the Railways portfolio and discourage the leveraging of the Rail Budget for handing out largesse to vote banks. Decisions like that are commercially crucial but politically challenging, especially fare hikes would now become routine ones taken any time during the course of a year without as much public glare, said an official.
  
Sep 22 2016 (6:57AM)  Mother of all mergers (www.thehindu.com)
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Rail Budget

News Entry# 280828     
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Posted by: rdb*^  123711 news posts
Ending a 92-year-old practice, the Union Cabinet on Wednesday approved the merger of the Railway and Union Budget from 2017
In a major overhaul, the Cabinet on Wednesday approved advancing the presentation of the annual Budget by a month, scrapped a over nine-decade-old tradition of having a separate Railway Budget and removed classifications for expenditure to make the exercise simpler.
With a view to getting all the legislative approvals for the annual spending and tax proposals before the beginning of the new financial year on April 1, the Cabinet headed by Prime Minister
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Narendra Modi approved advancing the date for presentation of the General Budget by a month instead of the present practice of unveiling it at the end of February.
The Cabinet also approved merging the Rail Budget with the General Budget and doing away with the distinction of plan and non-plan expenditure, officials said.To facilitate this, the Budget Session of Parliament will be called sometime before January 25, a month ahead of the current practice.
Advancing Budget prep
Accordingly, the beginning of Budget preparation will be advanced to early October and the GDP estimates made available on January 7 instead of February 7 now. Till now, Budget was presented on the last day of February and it is not until mid-May that Parliament approves it in two parts. And with the monsoon arriving in June, most of the schemes and spendings by states do not take off until October, leaving just half a year for their implementation.
Early presentation of Budget would mean that the entire exercise is over by March 31, and expenditure as well as tax proposals come into effect right from the beginning of the new fiscal, thereby ensuring better implementation.
Also, the 92-year-old practice of presenting a separate budget for Railways has been scrapped and proposals pertaining to it would now form part of the General Budget.
Saving time
This would lead to presentation of a single Appropriation Bill, including the estimates of Ministry of Railways, thereby saving precious time of Parliament. The Cabinet also approved removal of distinction between Plan and Non-Plan expenditure as the present classification resulted in excessive focus on former with almost equivalent neglect to items such as maintenance which are classified as Non-Plan.
The Cabinet felt it is the total expenditure, irrespective of Plan or Non-Plan, that generates value for the public. Plan expenditure was for the first time presented separately in the budget for 1959-60.PTI
  
Sep 22 2016 (6:50AM)  Railway Budget, a vanishing trick, writes K. Balakesari (www.thehindu.com)
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Rail Budget

News Entry# 280827   Blog Entry# 1999227     
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Posted by: rdb*^  123711 news posts
The hurry to bury the standalone Budget points to obfuscation under the smokescreen of reforms
So finally, the almost century-old practice of presenting a separate Railway Budget ahead of the General Budget is to be dispensed with from the next financial year (2017-18), and the Railway Budget “merged” with the General Budget. The Union Cabinet has just cleared the proposal.
What are the reported reasons for this merger? According to earlier media reports, a separate Railway Budget is being dispensed with so that the Indian Railways need not pay the annual dividend to
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the Government of India on the budgetary support given each year, saving the financially stressed Railways about Rs.10,000 crore annually; over the years, the Budget has been misused by politicians as a populist platform to enhance their own image; no other Ministry has a separate budget and the practice exists in no other country today; the Bibek Debroy Committee has recommended discontinuance of a separate Rail Budget and it is part of the Prime Minister’s reform programme. Besides, it is a colonial legacy.
A point particularly stressed by the Finance Minister in the press conference announcing the Cabinet decision was that the Railways’ share in the General Budget has progressively reduced over the years, making a separate budget an anachronism.
Each of these “reasons” does not present the true or complete picture. It is necessary to separate fact from fiction.
It is a review
There have been sporadic calls in the past for doing away with a separate Railway Budget for various reasons, but the matter was never pursued seriously. One of the more publicised reasons is that it will free the Railways of the obligation of paying the annual dividend, as mentioned earlier. This is only partly true. The dividend is paid not only on the budgetary support extended during a year but also on the total “capital at charge” which includes the gross budgetary support (GBS) of previous years. By this merger, a “loan-in-perpetuity” is converted to a grant. Shorn of officialese, it is a loan waiver; and loan waivers are granted to individuals or institutions in extreme financial distress — something not to go to town about.
In popular imagination, the Railway Budget was seen as a grand spectacle, with the Railway Minister using it as a platform for populism and political grandstanding. What is not appreciated is that the Budget is not merely a statement of allotment of funds to various projects and programmes, unlike other ministries, but comprises a fairly detailed performance review, physical and financial, of the previous year and prospects for the current (Budget) year. Perhaps nowhere in the world is a political functionary called upon to present a financial report card of the country’s largest public undertaking in the full glare of publicity. A separate post-Budget discussion in Parliament on the Railways, as indicated by the Finance Minister, is no substitute, as the focus most likely will be on allotments to various projects, not on financial performance.
Talking of populism, the recent announcement by the Finance Minister of the proposal to set up a new Railway zone to placate a State government as part of a “special package” is proof that it is possible to be “populist” outside a separate budget.
Why should there be a separate budget for the Railways? The fact is that the Railways is indeed unlike any other Central ministry in size and scope: It is an operational ministry; it earns as well as spends, unlike other ministries that only spend. Its gross earnings (Rs.1.68 lakh crore in 2015-16) are among the highest for any Indian organisation, public or private; it has a staff strength (13.2 lakh) that exceeds that of the Indian Army; it fully meets the pension liabilities of its retired employees (13.8 lakh) out of its own earnings unlike other ministries; it follows an accounting practice, though not up to the standards of a purely commercial establishment, that has a number of features of a commercially-run organisation. So, if the Railways is to be treated like other ministries, will the government also fund its pension liabilities which are estimated to be about Rs.45,500 crore in 2016-17? That should be some “savings” indeed!
Part of a package
Perhaps the most misquoted reason given for the merger is that the Bibek Debroy Committee has recommended it. That is being economical with the facts. The committee has recommended it not as a stand-alone step, but as part of a slew of measures such as: complete overhaul of the project financing architecture of the Railways involving ruthless weeding out of unviable/long-pending projects; comprehensive accounting reforms; separation of infrastructure and operations; and setting up of a rail regulatory authority. Pending these steps, each of which is a major project in itself (some politically sensitive), the move to give a hasty send-off to the Railway Budget is perplexing.
The Railway Budget is indeed a colonial legacy; but so are English, the Railways, Rashtrapati Bhavan and the sedition law. Enough said. All this is not to say that the Railway Budget is a holy cow that cannot be touched. Far from it. The question is not “why”, but “why such a hurry to bury it”?
The answer, in one word: Obfuscation. By all accounts, the Railways’ financial position is precarious due to the triple whammy of a fall in revenues, a sudden spike in expenditure due to implementation recommendations of the Seventh Pay Commission, and an increasingly unsustainable interest burden on market borrowings. A separate Budget would have meant having to openly declare an operating ratio in excess of 1.0 (in layman’s language, that means one is living beyond one’s means): not a very good advertisement for a system that aspires to have high-speed tilting Talgo trains shortly and Bullet trains in the not-too-distant future. So why not banish and “vanish” the Railway Budget into anonymity as one of the myriad annexures in the General Budget and earn a fat “bonus” of about Rs.10,000 crore in the bargain? A smart move indeed! It seems now the Budget is more valuable dead than alive. However, what should be a matter of serious concern to the aam aadmi is that the Railways’ finances are sought to be shored up, not by improving efficiency, increasing revenues and cutting costs, but through a dexterous bureaucratic sleight of hand, taking cover behind the smokescreen of “reforms”.
Finally, a suggestion to the government: Do not throw the baby out with the bathwater; table an annual “Indian Railways Report” in Parliament on the lines of the Reserve Bank of India’s Economic Survey. That will signal reforms with transparency.
K. Balakesari is former Member Staff, Railway Board.
Keywords: Railway Budget, General budget

  
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Sep 22 2016 (7:10PM)
For Better Managed Indian Railways~   1347 blog posts
Re# 1999227-1            Tags   Past Edits
Treatment given to IR by govt of India is surprising,
(1) why it force IR to pay annual dividend on amounts allocated to it in past when other ministries are not paying any
(2) why it force IR to bear subsidy for the social causes like operating uneconomical branch lines, subsidised suburban, second class travel etc which is a duty of Central Govt and not the Rly ministry
(3)why
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it force its pay recommendation on IR if it does not pay the same for Rly employees
(4) why it does not bear pension of employees of IR when it bears the same for other ministries. During and before independence IR was financially strong (revenue 70% of General budget) and carried more than three fourth of national frieght and was more capable than Govt. of India to pay for the salary & pension. Where as today IR is financially weak with about one fourth of market share of national traffic, govt of India which has much more financial might should bear pension burden like other ministries.
There are even more problems with Rly ministry. There are genuine apprehensions of FM fir the Rly ministry like:
(1) why IR (RM) does not take financially correct route of governing IR & want to run IR for his/her political interests which entails a huge financial loss.
(2) Why it want to run a parallel state as well as central government and fritter away its scarce resources and by meddling into the area of other ministries like Education-(Schools, colleges), Health-(Hospitals), Urban development & State Govts (Metro train) and so on. FM will not like to help & pay for the ministry headed by a brother who tends to act as a dominating father.
(3) RMs invariably running new trains, allocating for new projects to choicest routes/ destinations often defying/ bypassing the guidelines lineated by FM directly or indirectly.
(4) FM painstakingly collects revenue from myriad of sources/agencies and why would he like to give more money to Rly Ministry if the money is not being efficiently put to effective and productive use?
  
Sep 22 2016 (6:40AM)  Railways will stop paying dividend to Finance Ministry (www.thehindu.com)
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Rail Budget

News Entry# 280826     
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Posted by: rdb*^  123711 news posts
Union Cabinet scraps Railway Convention Committee that was constituted in 1949.
As the government decides to merge the Railway Budget and the General Budget, Union Cabinet on Wednesday scrapped the Railway Convention Committee (RCC) which determines the rate of dividend to be paid to the Finance Ministry, Railway Ministry sources said.
The Committee consisted of 18 members — 12 members from Lok Sabha and six members from Rajya Sabha. Both the Ministers of Railways and Finance are nominated members of the Committee. It was constituted in 1949 with the primary role of determining
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the rate of dividend, modalities of its payment and exemptions. It took on a wider role of examining various subjects related to working of the Railways and its finances since 1971.
The Union Cabinet decided on Wednesday that Railways will not pay dividend to the Finance Ministry for the capital invested in it beginning 2017-18. “Since dividend will no longer be paid, the RCC has been scrapped,” Railway Ministry officials said.
In 2016-17, the Railways is budgeted to pay Rs. 9,731 crore as dividend whereas the subsidy claimed by Railways towards loss-making routes is estimated at Rs. 4,301 crore. The net dividend payment to the Finance Ministry is estimated at Rs. 5,430 crore.
“The relief on this count will help us increase investments in track renewal, maintenance, station improvement and passenger amenities,” a top Railway Ministry official said.
However, pension will continue to be a liability of the Railways. In 2016-17, while the pension Bill is pegged at Rs. 45,500 crore, the wage Bill stands at Rs. 70,125 crore. The Railways will also bear the social commitment obligation by way of concessions or subsidised travel,” another official said.
  
Sep 21 2016 (10:35PM)  Understanding the economics of budgets merger (www.thehindu.com)
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Rail Budget

News Entry# 280815   Blog Entry# 1998455     
   Tags   Past Edits
This is a new feature showing past edits to this News Post.

Posted by: rdb*^  123711 news posts
What prompted the government to take the decision now? How does an early budget help? Here are the answers.
Ending a 92-year-old tradition, the Union Cabinet on Wednesday decided to merge the Railway budget with the General budget and agreed in principle to advance the date of its presentation in Parliament.
Why is the Rail budget presented separately in the first place?
Railway historians
...
more...
say that it was during the British rule — in the early 1920s — that on the basis of the report of the Acworth Committee, railway finances (those of government-owned railway companies) were separated from the general finances.
The first Railway budget, under the system, can be traced to 1924.
Why change now?
The move to discard the Rail budget is said to be part of the Modi government’s reform agenda. The NITI Aayog had suggested this merger as the Railway budget was being used to dole out favours by way of new trains and projects.
This merger is also a part of the government advancing the budgetary exercise so as to complete it before March 31 and facilitate the beginning of expenditure on public-funded schemes from April 1.
How is it beneficial?
The merger will help the Railways get rid of the annual dividend they has to pay for gross budgetary support from the government every year. Sources say that the merger will help the cash-strapped Railways save about Rs 10,000 crore annually.
Railway Minister Suresh Prabhu said the merger of rail and general budgets will not impact the functional autonomy of the railways but help in enhancing capital expenditure. It would help the Railways raise extra capital expenditure that would allow them to enhance connectivity in the country and boost economic growth.
How does an early budget help?
An early presentation of budget will ensure that all legislative works are completed before the beginning of the new fiscal, from April, and help in funds allocated to various ministries flowing in from the first quarter.
Sources said the government planned to convene the Budget Session of Parliament before January 25, 2017, present the pre-Budget Economic Survey a day or two before the Finance Minister reads out the budget on February 1.
The advance estimates for the GDP will now be made on January 7, instead of February 7, and mid-year review of expenditure by various ministries is proposed to be completed by November 15.
The idea is to get the budget passed by Parliament, along with the Appropriation Bill and the Finance Bill, before March 24, so as to ensure the implementation of the budget proposals from April 1.
Keywords: General budget, Railway budget, Suresh Prabhu, budget merger

  
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Sep 22 2016 (12:07AM)
For Better Managed Indian Railways~   1347 blog posts
Re# 1998455-1            Tags   Past Edits
(1) Advancement of the budget timing with a motive to start implementation of budget proposals from day-1 i.e. April 1 is a highly commendable action. How can we expect budget proposals to be timely implemented throughout the year if the beginning itself is delayed? This action truly reflects the PMs statement that days of "Chalega" "Dekhna hai" attitude are over and now Govt means timely action.
(2) Actual benefit of Rs 10000 crores for IR is at the mercy of finance minister, who can increase or decrease the gross budgetary support to IR at his will.
(3)If
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"Presentation of railway budget means doling out favors by way of new trains" (more to favoured state and less to others). Then does "abolishing of Railway budget" means doling of new regular (normal fare) trains to favoured states and Suvidha/ special fare train for the others? There are no norms where to run a "regular train with normal fare" and where to run the dreaded "suvidha/special fare" ones.
(4) Merger of Rail budget into General budget shall be beneficial only if the de-politicisation actually takes place. Merger is no guarantee of depoliticisation. Now RM can easily do away without giving anything to a particular state and even MPs of the particular state shall be helpless as there will no need to discuss and pass any rail budget in the parliament.

  
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Sep 22 2016 (12:13AM)
a society gets a criminal or politician it deserve~   3824 blog posts   37 correct pred (62% accurate)
Re# 1998455-2            Tags   Past Edits
/blog/post/1998169
IR can very soon privatise its premier trains or these will be completely called off.

  
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Sep 22 2016 (12:17AM)
For Better Managed Indian Railways~   1347 blog posts
Re# 1998455-3            Tags   Past Edits
Privatisation is essential at his juncture to bring in efficiency in railway operations.

  
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Sep 22 2016 (11:17AM)
a society gets a criminal or politician it deserve~   3824 blog posts   37 correct pred (62% accurate)
Re# 1998455-4            Tags   Past Edits
All the so called subsidies will be rolled back and it will hit the lower middle class and BPL class the most..

  
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Sep 22 2016 (3:16PM)
For Better Managed Indian Railways~   1347 blog posts
Re# 1998455-5            Tags   Past Edits
“Subsidy” gives a wrong impression in context of IR passenger fares. Even Niti Ayog has concluded that Fares of AC2,ACC,ACI,EC are much morehigher than the equivalent Luxury Bus fares. Still IR is losing on these classes. The loss is because of excessive resources used by IR (i.e. internal inefficiencies) and not due to low fare as IR claims. Similarly the so called under recovery or subsidy say 50 Rs. per 100 Rs. spent by IR in second class is made up of two components. (1) Extra input by way of inefficiency or financially imprudent ways of working of IR (which may be 25Rs) and (2) lower fare than the reasonable economic value (which then shall be 25Rs).
If inefficiencies in IR can
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be clipped down, the costing itself shall come down to Rs 75 instead of 100. The above ac classes shall be profitable at present fares.The subsidy burden shall actually be halved even without increasing fare. The general class fares which had not been increased for a decade are today reduced to a ridiculously low level needs correction, but can be managed with reasonable escalation for coming few years without much troubling the people.
If done properly, privatisation in Rly sector can bring in efficiency as has been observed in road and airline sectors, the costing of a seat is likely to be drastically reduced mainly through efficient use of huge resources which IR deploys for conducting its business, rather than increase of fares.
(1) Privatisation has to be brought to bring in competition and improve the efficiency rather than to eliminate the govt role altogether. Nothing should be left totally in the hands of govt. or pvt. Players, else the results will be disastrous. Best way out is to let pvt. Players and govt owned companies compete with each other and customer have a choice to select the best suited service. Presence of govt ensure elimination of looting of consumers through formation of cartel amongst pvt. Companies.
(2) Telecom sector is the best example where govt. owned BSNL is competing with plethora of pvt sector companies and public is benefitted through reasonable price of the services availed. Take the case of airlines, bus operators, taxi operators where intense competition between pvt. & govt. players result in very high efficiency of operation and passengers are reaping the benefit.
(3) In case of railway transport in India, there is monopoly of govt. owned IRlys, hence there had been little improvement in working practices. We see trains running with astonishingly low occupancies even below 10% running for months and years causing huge financial losses which adds to the costing of IR. If we start enumerating inefficient operations in IR, the list will run into several pages. All these adds drastically to the losses or increase the cost of seat/ berth offered
(4) Huge advantages that monopolistic IR enjoy over road & air transporters
- Energy is supposed to be the main cost component in transportation, rail transport consume one sixth the energy consumed in road transport, and even lesser than air transport.
- Economies of scale- One truck usually carry 15-20T as against about 4000-5000T by railways. One bus carry about 40-50 passengers as against about 1000-2000 passengers by train.
(5) Even after the above advantages, employee cost of IR is huge 68% of total IR revenue. Whereas road operators in spite of inherent disadvantages are making handsome profits and expanding their business at rapid pace.
The solution lies mostly in adopting innovation and out-of-box thinking and critical evaluation of every activity of IR and eliminating activities which are redundant today due to automation/ technological development. There are two aspects,
-1- IR is using too many resources than it should be. Cost control is required by actions like
o Elimination of the unnecessary posts, activities
o Transferring resource consuming and unrelated entities like schools, colleges, hospitals, Metro trains etc to respective deptts. Like Education, Health, Urban Development/State Govts and many more.
o Identification of loss making entities like trains, stations, projects & Rationalisation of the same to reduce/ eliminate losses.
o Study of the facilities provided to passengers, employees, vendors, coolies etc. The facilities enhancing productivity has to be encouraged, the unnecessary ones need to be rationalised.
-2- IR is not generating sufficient revenue because the resources are not put to optimum use. Introducing trains without adequate market survey many a times on the routes with very low demand. Investing the scarce resources on financially unjustified lines with very low or negative rate of return.
  
The Union Cabinet has approved the proposals of Ministry of Finance on certain landmark budgetary reforms relating to (i) the merger of Railway budget with the General budget, (ii) the advancement of the date of Budget presentation from the last day of February and (iii) the merger of the Plan and the Non-Plan classification in the Budget and Accounts. All these changes will be put into effect simultaneously from the Budget 2017-18.
Merger of Railway Budget with the General Budget:
The arrangements for merger of Railway budget with the General budget have been
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approved by the Cabinet with the following administrative and financial arrangements-
(i) The Railways will continue to maintain its distinct entity -as a departmentally run commercial undertaking as at present;
(ii) Railways will retain their functional autonomy and delegation of financial powers etc. as per the existing guidelines;
(iii)The existing financial arrangements will continue wherein Railways will meet all their revenue expenditure, including ordinary working expenses, pay and allowances and pensions etc. from their revenue receipts;
(iv)The Capital at charge of the Railways estimated at Rs.2.27 lakh crore on which annual dividend is paid by the Railways will be wiped off. Consequently, there will be no dividend liability for Railways from 2017-18 and Ministry of Railways will get Gross Budgetary support. This will also save Railways from the liability of payment of approximately Rs.9,700 crore annual dividend to the Government of India;
The presentation of separate Railway budget started in the year 1924, and has continued after independence as a convention rather than under Constitutional provisions.
The merger would help in the following ways:
· The presentation of a unified budget will bring the affairs of the Railways to centre stage and present a holistic picture of the financial position of the Government.
· The merger is also expected to reduce the procedural requirements and instead bring into focus, the aspects of delivery and good governance.
· Consequent to the merger, the appropriations for Railways will form part of the main Appropriation Bill.
Advancement of the Budget presentation:
The Cabinet has also approved, in principle, another reform relating to budgetary process, for advancement of the date of Budget presentation from the last day of February to a suitable date. The exact date of presentation of Budget for 2017-18 would be decided keeping in view the date of assembly elections to be held in States.
This would help in following ways:
· The advancement of budget presentation by a month and completion of Budget related legislative business before 31st March would pave the way for early completion of Budget cycle and enable Ministries and Departments to ensure better planning and execution of schemes from the beginning of the financial year and utilization of the full working seasons including the first quarter.
· This will also preclude the need for seeking appropriation through 'Vote on Account' and enable implementation of the legislative changes in tax; laws for new taxation measures from the beginning of the financial year.
Merger of Plan and Non Plan classification in Budget and Accounts:
The third proposal approved by the Cabinet relates to the merger of Plan and Non Plan classification in Budget and Accounts from 2017-18, with continuance of earmarking of funds for Scheduled Castes Sub-Plan/Tribal Sub-Plan. Similarly, the allocations for North Eastern States will also continue.
This would help in resolving the following issues:
· The Plan/Non-Plan bifurcation of expenditure has led to a fragmented view of resource allocation to various schemes, making it difficult not only to ascertain cost of delivering a service but also to link outlays to outcomes.
· The bias in favour of Plan expenditure by Centre as well as the State Governments has led to a neglect of essential expenditures on maintenance of assets and other establishment related expenditures for providing essential social services.
· The merger of plan and non-plan in the budget is expected
to provide appropriate budgetary framework having focus on the revenue, and capital expenditure.
*****
AKT/VBA/SH

(Release ID :150987)

  
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Sep 21 2016 (10:28PM)
Kishor*^~   4424 blog posts   123 correct pred (62% accurate)
Re# 1998382-1            Tags   Past Edits
1-after this step of merging General Budget and IR budget,
2- second step will be to streamline the Budget period with World Budgets. and hence
3- The next budget may have 9 months period from April to Dec.
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