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Rail Budget merger is the biggest reform in the sector: Railways Minister Suresh Prabhu

Economic Times:  September, 2016

New Delhi: The merger of Rail Budget with the general budget means an instant bonanza of Rs 9,700 crore for the Railways as now it won't need to pay the central government a dividend on the capital at charge, Railways Minister Suresh Prabhu said in an interaction with ET's Rajat Arora, soon after the Cabinet approved the merger proposal. Edited excerpts:

What does the merger of Rail Budget with the Union Budget mean for the Railways?

I would say it is the biggest reform that has been done in this sector till date. But even after the budget merger, we will retain our financial autonomy. The general managers and divisional railway managers will be equally empowered. The finances would be managed in the same manner but we will be much more focused as the procedural requirements will reduce.

We will continue to discharge all our financial commitments including capacity expansion and improving passenger amenities through our internal resources and through the budgetary support we receive from the government. The existing financial arrangements will continue and we will meet all revenue expenditure, working expenses, pay and allowances, and pensions from their revenue receipts.

We will have a distinct identity as a commercially-run department. Just that you won't hear a Rail Budget speech from me next year! We will, however, have a separate discussion on the Railways expenditure in Parliament. One good thing now is that we will get an instant relief of Rs 9,700 crore that we had to pay earlier as dividend on the capital at charge. I had requested the Prime Minister's Office and the finance minister to waive it off. They have been very positive and supportive to the growth agenda set by Railways.

Does the merger mean all your social obligations, including passenger subsidy, also get transferred?

We will continue servicing all our financial commitments through our resources, including the burden of the Seventh Pay Commission. As far as transferring of social commitments like giving concessions to students, women, senior citizens and sportsmen to their respective ministries is concerned, that is yet to be sorted out. Our officials will be looking into all those modalities. No decision has been taken on it yet.

What are the other big reforms on cards?

For the last one year, we have been aggressively pushing for setting up an independent regulator for the Railways. Very soon, we will get an independent regulator for Railways cleared by the Cabinet. It is almost in the final stages. The regulator would be free to recommend fares and freight rates. It would rationalise the entire fare structure for the railways. It would be a big transformational change for the organisation. We will keep rationalising fare as per the market demand.

You had recently introduced the concept of surge pricing for premium trains. Will it be extended to other trains as well?

As of now, we are not considering any such proposal. But I must say that there is a need for us to be market focused, so that we have enough capacity and resources to cater to demand.

What about redevelopment of stations?

The plan is very much in place. A lot of investors, state governments and multilateral agencies have shown interest. In another week, we will have an important update on it.