Budget 2022

Rail Bhavan, North Block spar after Budget merger

Finance Minister Arun Jaitley with Minister of State Arjun Ram Meghwal (left) arriving at Parliament House  to present the Budget.

Finance Minister Arun Jaitley with Minister of State Arjun Ram Meghwal (left) arriving at Parliament House to present the Budget.


Less than a fortnight after the historic merger of the Railway Budget with the Union Budget, the Railways and Finance Ministries are not seeing eye-to-eye on some critical issues, including finances.

The Finance Ministry, which has taken charge of presenting the annual accounts for the railways, has asked the Railway Ministry to hereafter remit the annual dividends it receives from the 14 central public sector units (CPSUs) under its purview.

Rail Bhavan mandarins are not amused as saving on dividend payments to the Ministry of Finance was one of the biggest arguments made in favour of scrapping the Railway Budget. The Railway Ministry has shot back, arguing that giving away the dividends from the CPSUs – estimated at about ₹850 crore for 2017-18 – would hit its earnings.

In a communication in January, the Finance Ministry told the Railway Ministry that since the ‘capital-at-charge’ of the railways – on which annual dividend was paid by the railways – would be wiped-off post the budget merger, the investment made in the railways-related PSUs would be treated as having come from the Central government’s accounts. ‘Capital-at-charge’ is the Centre’s investment in the railways — treated as loan in perpetuity.

“In view of this, the Ministry of Railways is requested to remit the dividends received from its CPSUs to General Revenues,” the Finance Ministry said in the letter of January 9.


The railways will no longer be required to pay annual dividend of about ₹9,000 crore to the Finance Ministry for the capital invested in it following the budget merger. “The government approved the merger on the premise that, besides maintaining its distinct entity as a departmental commercial undertaking as at present, the railways would also retain its functional and financial autonomy,” the Railway Ministry said in its reply to the Finance Ministry on February 13. “The existing financial arrangements with regard to railway revenue and expenditure has thus to continue even after merger.”

The Railway Ministry said the dividend received by the railways from its CPSUs is not a part of the ‘capital-at-charge’. It went on to point out that since the dividends from the CPSUs is a part of the railways’ overall traffic earning projections for 2017-18, remitting the dividend to the Finance Ministry “would add to shortfall in the Railway earnings.”

“As the Ministry of Finance, in the larger scenario, is responsible for meeting any gap in the railway resources, the present arrangement of retaining the dividend for railway PSUs in the railway earnings may continue,” the Railway Ministry said.

Earlier, the Railway Board members were surprised at Finance Minister Arun Jaitley’s budget announcement listing PSUs IRCTC, Indian Railway Finance Corporation and IRCON on the stock markets. The railways had proposed forming a holding company for its stakes in 13 of its public sector companies.

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Printable version | May 25, 2022 1:30:44 pm | https://www.thehindu.com/business/budget/rail-bhavan-north-block-spar-after-budget-merger/article17330359.ece