New Delhi: The 92-year-old tradition of a separate Rail Budget is likely to become a thing of the past with a committee to finalise the modalities for its merger with the General Budget submitting its report to the Finance Ministry.

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The report on merger of Rail Budget and General Budget which was to be submitted by August 31, was delayed due to some "unavoidable reasons" and it was submitted to the Finance Ministry on September 8, sources in the railways said.

The government had constituted a 5-member committee comprising senior officials of the ministries of Finance and Railways to work out the modalities for the merger.


Though the sources declined to divulge the committee's recommendations on the ground that the "report is now in the Finance Ministry's domain", it is believed that a detailed framework for a way forward has been worked out for merger of two budgets.

The panel is understood to have advocated that the General Budget should have a separate annexure for the rail budget detailing the grant, expenditure and new projects for the next fiscal.

Since the railways has already given its consent for the merger, it is now for the Finance Ministry to take a call on the issue, they said.

Earlier this year, a committee headed by NITI Aayog member Bibek Debroy, in a report titled "Dispensing with the Railway Budget", recommended that the two budgets should be merged.

Last month, Railway Minister Suresh Prabhu had said, "I had written to Finance Minister Arun Jaitley for merger of the Rail Budget with the General Budget. This will be in the railways' interest and also in the nation's interest. We are working out the modalities."

The report is believed to have suggested ways for dealing with the railways' huge financial burden, once the Rail Budget is merged with Union Budget.

At present, the railways has to bear an additional burden of about Rs 40,000 crore on account of implementation of the 7th Pay Commission awards, besides an annual outgo of Rs 33,000 crore on subsidies for passenger service.

The delay in completion of projects resulted in cost overruns of Rs 1.07 lakh crore and huge throw-forward of Rs 1.86 lakh crore in respect of 442 ongoing rail projects.

The report is also understood to have addressed the contentious issue of annual dividend payment by the railways on account of receiving gross budgetary support (GBS).

The railways pays about Rs 10,000 crore a year to the Finance Ministry as dividend for getting the GBS.

Jaitley will take a final call on whether to break the tradition of presenting a separate Rail Budget, by merging it with the General Budget.

However, the merger will have political implications as almost every railway minister, particularly in coalition governments, has addressed his or her constituency by way of announcing new trains and projects.

The much sought after ministry is likely to lose much of its sheen if the merger happens.