Indian Railways have been a loss-making unit since time immemorial. Would a 2020 request made by the Railways to the Budget Committee be heeded to in 2021?
Crux of the Matter
- As claimed by V.K Yadav, Chairman, and CEO of Railway Board, about 25% of the railway’s earnings or ₹50,000 crores are consumed by the pension expenses of its former employees.
- Owing to its existing economic constraints, Railways had asked the Finance Ministry to set up a separate Pension Fund for Railways, which was not paid attention to in the budget of 2020.
Pay Commission Revisions
Railway Minister Piyush Goyal claimed that with the implementation of 7th Central Pay Commission, the salary expense of Railways have gone up by ₹28,000 crores – this amount borne by Railways is ~30% of the total increased financial burden of
PSUs due to the 7th CPC.
Why The Demand For Separate Pension Fund?
- 25% of the railways’ earning goes into paying the pensions to 15.5 lakh former employees.
- The expense of pension fund is further expected to increase further with about 40% of railways staff being above 50 years of age in 2016 -17.
Will Budget 2021 prove to be a saviour for the plunging Railway Department? Will Finance Ministry this year be paying any attention to creating a different pension fund for Railways? Well, only time will tell.
- The first Union budget of independent India was presented by R. K. Shanmukham Chetty on 26 November 1947. Morarji Desai has presented 10 budgets which is the highest count followed by P Chidambaram’s 9 and Pranab Mukherjee’s 8.
- Until the year 1999, the Union Budget was announced at 5:00 pm on the last working day of the month of February. All that budgets seemed to do was to raise taxes, a presentation in the evening gave producers and the tax collecting agencies the night to work out the change in prices. It was Mr Yashwant Sinha, the then Finance Minister of India who changed the ritual by announcing the 1999 Union Budget at 11 am.
- In 2016, departing from the colonial-era tradition of presenting the Union Budget on the last working day of February, Minister of Finance (India) Arun Jaitley announced that it will now be presented on 1 February. Additionally Rail Budget, presented separately for 92 years, merged with the union budget.