A Project Report On

“ANALYSIS OF BUDGETING PROCESS IN

INDIAN RAILWAY”

This Report is submitted in the partial fulfilment of the requirements

for the Degree of
Master of Business Administration
By
Roshni Aathiya
Enrolment No. : - Y17282027

Department of Business Management

Dr. Harisingh Gour University
Sagar (M. P.) India
Year- 2018

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 Acknowledgement

The project on “Analysis of budgeting process in Indian Railways” is a

good result of co-operation, hard work and good wishes of many people.
I am eternally grateful to god-almighty for bestowing his blessings on
me by the virtue of which I could complete this work successfully. I owe
my gratitude to my guide Miss SuneetWalia Assistant Professor, Dr
Harisingh gour Central University, Sagar (m.p.)for immense
encouragement, and motivation.

I also wish to show my gratitude to Mrs. Ekta AroraSr. DFM, West

Central Railway, Bhopal and MrR. P. Sharma, Senior SO (Accounts),
West Central Railway, Bhopal for their guidance with necessary
materials and for their precious time allotted to me throughout this
project.

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 Index

S. Topic Page No.

No.
1. Indian railway 5
2. History of Railways in India 5-6
3. Railway Zones and their Head Quarters 7-9
4. Budget& Railway Budget 9
4.1 History of Railway Budgeting in India 10
4.2 The Acworth Committee 11
4.3 The consolidated fund of India and 11
contingency fund
4.4 Demand for Grants 11-12
4.5 Budget planning 12-16
4.6 Compilation and scrutiny of budget in the 16
Railway Board
4.7 Submission to the Minister 16
4.8 Presentation to the Parliament 17
4.9 Appropriation Bill 17
4.10 Administering the Budget 17-18
4.11 Responsibility of Railway Administration 18
in case of Excess or Lapse
4.12 Powers of Railway Administrations in 19
case of emergent and inevitable
expenditure
4.13 Powers of the Railway Board 19
4.14 Powers of the Railway Administration 19
4.15 Unforeseen Expenditure- operation from 20

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 the Contingency Fund of India
5 Gist of Railway Budget 2018-19 21-22
6 Survey 22
7 Estimate 23
8 Tender 29
9 Contract 32
10 Bills payable and bills receivable 33
11 Conclusions 34
12 Bibliography 35

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 1. Indian Railways

Indian Railways (Hindi:Bhāratīya Rail), abbreviated as IR (Hindi:), is the state-owned

railway company of India, which owns and operates most of the country's rail transport. It is
overseen by the Ministry of Railways of the Government of India. Indian Railways has more
than 64,015 kilometres (39,777 miles) of track and 6,909 stations. It has the world's fourth
largest railway network after that of the United States, Russia and China. It is one of the
world's largest commercial or utility employers, with more than 1.6 million employees. The
railways traverse the length and breadth of the country and carry over 20 million passengers
and 2 million tons of freight daily. IR owns over 200,000 (freight) wagons, 50,000 coaches
and 8,000 locomotives.

2. History of Railways in India

The core of the pressure for building railways in India came from London in 1840s. For a
century thereafter the basic policies and ultimate management of the Indian Railways were
issued from London. The British built railways in India in order to intermesh the economies
of the two countries. The building of railways in India brought about unintended as well as
hoped for consequences in economic, political and military front. The new railways tied the
different parts of India together more closely than ever before. The first proposals for
construction of railways in India were presented in 1844 to East India Company in London
by (a) East Indian Railway (EIR) company which was headed by R. McDonald Stephenson,
and (b) Great Indian Peninsula Railway (GIPR) company. George Stephenson the great
British Locomotive inventor was one the first Directors of GIPR and his son Robert
Stephenson was appointed as the consulting engineer based at London.
Both E.I.R. and G.I.P.R were incorporated in England for the purpose of constructing railway
lines in Calcutta and Bombay presidencies respectively. Though GIPR company was formed
in 1844. George Stephenson could not see his Locomotives run on Indian soil as he died in
1848.
Some mention should be made of the role of Indian businessmen played in the early years.
There were Indian merchants, both in Calcutta and Bombay who took an interest in funding
of the railways. The most prominent of these was a remarkable Bengali merchant Prince
Dwarkanath Tagore, grandfather of Nobel laureate poet Rabindranath Tagore. Dwarkanath's
firm Carr, Tagore & Company is reported to have offered in 1844, to raise one-third of the
capital required for a railway from Calcutta northwest to the coalfields above Burdwan. After
Dwarkanath's premature death a few years later the other Indian businessmen played only a
passive role. The conception, promotion and launching of India's railways were all by the
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British. By the year 1845, two companies were formed and the East India Company was
requested to support them in the matter.
The credit from the UK investors led to the hasty construction of a rail system over the next
few years. On 22nd Dec' 1851, the first train came on the track to carry the construction
material at Roorkee in India. With a passage of one and a half years, the first passenger train
service was introduced between BoriBunder (Bombay) and Thana on the providential date
16th Apr' 1853. This rail track covered a distance of 34 kms (21 miles). Ever since its origin,
the rail service in India never turned back.

The British Government approached private investors and persuaded them to join the race
with a system that would promise an annual return of 5% during the early years of operation.
Once finished, the company would be transferred under the Government ownership, yet the
operational control will be enjoyed by the original company. In 1880, the rail network
acquired a route mileage of about 14,500 km (9,000 miles), mostly working through Bombay,
Madras and Calcutta (three major port cities).
By 1895, India had started manufacturing its own locomotives. In no time, different
kingdoms assembled their independent rail systems and the network extended to the regions
including Assam, Rajasthan and Andhra Pradesh. In 1901, a Railway Board was formed
though the administrative power was reserved for the Viceroy, Lord Curzon. The Railway
Board worked under the guidance of the Department of Commerce and Industry. It was
comprised of three members - a Chairman, a Railway Manager and an Agent respectively.
For the very first time in its history, the Railways instigated to draw a neat profit. In 1907,
most of the rail companies came under the government control. Subsequently, the first
electric locomotive emerged in the next year. During the First World War, the railways were
exclusively used by the British. In view of the War, the condition of railways became
miserable. In 1920, the Government captured the administration of the Railways and the
linkage between the funding of the Railways and other governmental revenues was detached.
On the occasion of India's Independence in 1947, the maximum share of the railways went
under the terrain of Pakistan. On the whole, 42 independent railway systems with thirty-two
lines were merged in a single unit and were acknowledged as Indian Railways. The existing
rail networks were forfeited for zones in 1951 and 6 zones were formed in 1952. With 1985,
the diesel and electric locomotives took the place of steam locomotives. In 1995, the whole
railway reservation system was rationalized with computerization.

And now after 155 years, the Indian Railways is in a tremendous look out for growth with
trains touching speeds as high as 130-150 km/h and prestigious trains like Rajdhani Express,
Shatabdi Express, Duronto Express and the SamparkKrantis covering the length and breadth
of the country. Many of the meter gauge tracks are being converted into broad gauge system,
unelectrified sections are being electrified and single line sections are being doubled to
transport more passengers and goods.
The construction of Konkan Railway on the west coast part of India was one of the marvels
of modern Indian Railways. This was a challenging task due to many mountains and rivers in

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between. Though it took 7 years to complete laying of tracks in the 760 odd kms stretch, but
it reduced the travel time between Mumbai and Kerala by a great margin.

3. Railway zones & their Headquarters

Indian Railways is divided for administrative convenience into several regional railways.
Until recently there were 9 zones, and this structure had not changed much for four decades.
Recently, 7 new zones have been created, giving a total of 16.

S/No. Name of the Railway Zone Zonal Headquarter Division

1 Central Railway Mumbai 1) Mumbai

2) Nagpur
3) Bhusawal
4) Pune
5) Sholapur

2 Eastern Railway Kolkata 1) Howrah-I

2) Howrah-II
3) Sealdah
4) Malda
5) Asansol
6) Chitaranjan
7) Kolkata
Metro

3 East Central Railway Hajipur 1) Danapur

2) Mugalsarai
3) Dhanbad
4) Sonpur
5) Samastipur

4 East Coast Railway Bhubaneshwar 1) Khurda Road

2) Waltair
3) Sambhalpur

5 Northern Railway Baroda House, New Delhi 1) Delhi-I

2) Delhi-II
3) Ambala
4) Moradabad
5) Lucknow
6) Firozpur

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6 North Central Railway Allahabad 1) Allahabad
2) Jhansi
3) Agra

7 North Eastern Railway Gorakhpur 1) Izzatnagar

2) Lucknow
3) Varanasi
4) DLW

8 North Frontier Railway Maligaon, Guwahati 1) Katihar

2) Alipurduar
3) Rangiya
4) Lumding
5) Tinsukhia

9 North Western Railway Jaipur 1) Jaipur

2) Jodhpur
3) Bikaner
4) Ajmer

10 Southern Railway Chennai 1) Chennai

2) Madurai
3) Palghat
4) Trichy
5) Trivendrum

11 South Central Railway Secunderabad 1)Secunderabad

2) Hyderabad
3) Guntakal
4) Vijaywada
5) Nanded

12 South Eastern Railway Garden Reach, Kolkata 1) Kharagpur

2) Adra
3)Chakradharpur
4) Ranchi
5) Shalimar

13 South East Central Railway Bilaspur 1) Bilaspur

2) Nagpur
3) Raipur

14 South Western Railway Hubli 1) Bangalore

2) Mysore
3) Hubli
4) RWF/YNK

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15 Western Railway Mumbai CST 1) BCT
2) Vadodara
3) Ahemdabad
4) Ratlam
5) Rajkot
6) Bhavnagar

16 West Central Railway Jabalpur 1) Jabalpur

2) Bhopal
3) Kota

4. Budget

Budget - A Constitutional and Management Document -Article 112(1) of the Constitution of

India prescribes that 'the President shall in respect of every financial year cause to be laid
before both the Houses of Parliament a statement of the estimated receipts and expenditure of
the Government of India for that year’ referred to as the "annual financial statement" and
popularly called the "Annual Budget". Though the constitutional requirement is only that the
'financial statement' shall contain a statement of the estimated receipts and expenditure for the
coming financial year, as a matter of practice, every budget contains three elements-

(a) a review of the preceding year, including the actual receipts and expenditure in that year
; (b) an estimate of the receipts and expenditure of the coming year; and (c) proposals, if
any, for meeting the requirements of the coming year.

Though the Constitution does not provide for the presentation of the annual financial
statement or Budget in parts, the Rules of Procedure of Parliament have provided that
'nothing shall be deemed to prevent the presentation of the Budget to the House in two or
more parts and when such presentation takes place, each part shall be dealt with in
accordance with the rules as if it were the Budget'. This provision has enabled the Separation
of the Railway Budget from the General Budget and the passing of separate Appropriate Acts
for each of these Budgets in keeping with the Separation Convention (1924). The Railway
Budget is, therefore, presented to both Houses of Parliament separately from and ahead of the
General Budget. Though the Railway Budget is separately presented to Parliament, the
figures relating to the receipts and expenditure of the Railways are also shown in the General
Budget, since the receipts and expenditure of the Railways are part of the total receipt and
expenditure of the Government of India.

A statement of estimated annual receipt and expenditure whether on Capital or Revenue

account of Central Government is prepared by the Railway Board (Based on individual
Railways estimated receipt and demands for expenditure) and laid before the parliament in

9
the form of demand for grants. In other words it can be said that under Article 112 of
constitution of India, the president will call upon a statement from railways showing the
estimate income and outlay amount that has to cross the consolidated fund of India. These
statements are known as “Budget”

4.1History of Railway Budgeting in India

We all know that Railways was started in India during 1853 by the British. Nearly 50 years
after 1853, there were 33 separate railway administrations operating over 41,000 kilometres.
Of these, 4 were worked by the Government of India 5 by erstwhile Indian states &
remaining 24 by railway companies.
The non-government railways were operated under varying degrees of government
supervision, their regulations & controls vested in railway branch of Public Works
Department (PWD) of the Government of India. The department was headed by an officer of
Indian Civil Service, who was a member of the viceroy & Governor generalexecutive’s
council. He was assisted in the railway branch by one secretary, three deputy secretaries, four
undersecretaries and 4 assistant secretaries.
The entire railway system was divided into 7 circles. A team of consulting engineers and one
government examiner of accounts were posted to each of these 7 circles.

In October 1901, the secretary of state for India in council appointed Sir Thomas Robertson,
C.V.O as special commissioner for Indian Railways to enquire into and report on the
administration and working of Indian Railways. In the report, Sir Thomas Robertson
recommended setting up of railway board consisting of a President or chief commissioner
and two other commissioners all of whom should have practical knowledge of railway
matters. He also insisted that the board should be assisted by a secretary, a chief inspector of
railways, the necessary number of ordinary inspectors and the requisite number of
government auditors. These recommendations lead to a decision in early 1905 to abolish the
railway branch of Public Works Department and to transfer the control of railway system to a
railway board consisting of a chairman and 2 others.

The railway board assumed office in March 1905 being directly responsible to the
government of India in department of commerce and industry and their staff included
amongst others an examiner of accounts, redesignated in the following years as railway
accounts officer. Later a separate post of ‘accountant general, railways’ was created after
abolishing the post of accountant general, PWD.

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 4.2The Acworth Committee

One of the most important landmarks in railway finance was the report submitted by the
Acworth Committee. The Acworth Committee aimed at separating the railway finance from
the general finances of the government. Accordingly, a resolution was adopted by the Central
Legislative Assembly on 20th September, 1924 as a convention. This resolution provided for
a separate railway budget and was known as ‘separation convention’.
So therefore the railway budget was separated from the general budget and it is presented on
both houses of the parliament separately ahead of the general budget. So every year,
estimates of receipts and expenditure (cumulatively called the ‘Budget’) of railways are
presented to the parliament by the railway minister of India.

4.3 The consolidated fund of India and contingency fund

All receipts of railways from fees, taxes and all other sources get credited to the consolidated
fund of India. No money can be withdrawn from the consolidated fund, except as per the
procedure laid down in the constitution. Even the salary of staff cannot be taken from the
station earnings as all these receipts become the part of the consolidated fund of India.

 All earnings and expenditure forms part of Consolidated Fund of India.

 Unforeseen expenditures like protection of life and property, restoration of lines due
to accidents etc. is met from the Contingency Fund held by the President and Post
facto sanction of Parliament is obtained to recoup Contingency Fund

4.4 Demand for Grants

The estimates of expenditure are to be presented in the form of ‘Demand for Grants’ to the
LokSabha. The railway budget totally involves 16 demands. The parliament then discusses
the details of each of demand and the members have the right to propose motions for token
cuts in the amount asked for in the demands. Cut motions are motions to reduce the amounts
for demand for grants. The object of a cut motion is to draw the attention of the House to the
matter specified therein. After the process of ‘demand for grants’, the request for the total
amount of money to be appropriated from the consolidated fund of India to meet the railway
expenses is presented to the parliament in the form of Appropriation Bill (Railways).

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Once this Bill is passed and is signed by the President of India, it becomes the Act. Only after
this and withdrawal from the consolidated fund of India is possible during the financial year.
So therefore it is necessary that the entire parliamentary procedure of passing the budget is
completed before 31st March.
The following explains various demands under ‘Demand for Grants:
1 Railway Board
2 Miscellaneous expenditure
3 General Superintendence and Services
4 Repairs and Maintenance of Way and Works
5 Repairs and Maintenance of Motive Power (Locomotives)
6 Repairs and Maintenance of Carriage and Wagons
7 Repairs and Maintenance of Plant and Equipment
8 Operating Expenses- Rolling Stock and Equipment
9 Operating Expenses- Traffic
10 Operating Expenses- Fuel
11 Staff Welfare and Amenities
12 Miscellaneous Working Expenses
13 Provident Fund, Pension and other Retirement Benefits
14 Appropriation to Funds
15 Dividend to General Revenues, Repayment of loan taken from General Revenues and
Amortization of over-capitalization
16 Assets-Acquisition, Construction and replacement.

4.5 Budget planning (process)

Budget process starts at once after realising all the needs and thereby making subsequent
plans for the needs. Each railway zone will have its own needs right from a smaller one to a
very big one. The need or a requirement is realized by the filed officer through passenger
complaints/suggestions, through maintenance engineers or by himself. Maintenance
engineers are present at every 100 kilometres across the length and breadth of the country.
Based on their observations and requirements of passengers, they communicate the need to
the filed officer. The filed officer then analyses the need or the requirement and depending
upon the amount he may himself sanction it or may forward it to Divisional Railway
Manager (DRM) or General Manager (GM).

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In Indian Railways, planning for the budget 2 years hence starts in advance. For e.g. process
and planning for the railway budget 2012-2013 starts from 2010-2011. So for the budget
recently presented for the financial year 2010-2011, the planning and process would have
started in 2008-09.
If the amount of a ‘work’ exceeds Rs. 5 crores, then it may be sent to the railway board for
sanctioning. If the amount exceeds Rs. 50 crores, then it is referred to the Planning
Commission for further approval. All the ‘works’ costing above Rs. 2.5 crores are published
in the Pink Book of Railways.
The entire responsibility for framing the estimates devolves upon the spending/earning
authorities concerned, though the actual work of compilation and scrutiny would rest with the
Financial Adviser and Chief Accounts Officer who would draw the attention of the General
Manager to matters of purely financial import. The estimates should be as accurate as
possible and to achieve this object care should be taken to see that data on which the forecast
is made is adequate and reliable and that the conclusions arrived at from the data can be
sustained by past experience and future expectations of likely events. The proposal of works
of new lines, gauge conversion, doubling and electrification are initiated at the railway board
level. Railway zones do not propose these works. Railway zones prepare the works program
on the basis of ceilings and norms communicated by the railway board.
A table below gives an idea about the schedule of the budget process and planning.
On the basis of the proposals of works sent by various railway zones, the railway board
scrutinises the proposals and depending upon the work, it may or may not sanction the
amount. If the railway board sanctions the amount, it is understood that the board is satisfied
with the proposal and completion of the work. Sometimes the railway board’s estimation may
differ with the zonal railway’s estimate of the work and if the zonal railway estimate is more
than the board’s estimate, the railway board will sanction the amount as estimated by the
railway board. In cases where the railway board does not accept a proposal and does not
sanction the amount for the same, the railway board will communicate with the respective
zonal railway and convey them why it was not sanctioned. And if the zonal railway feels that
the particular work which was not sanctioned is of utmost importance, then it can
communicate with the railway board again and explain the board the importance of that
particular work for which the railway board refused a sanction.

For the preparation of Budget by the railway board, the railway administration and other
authorities empowered to incur expenditure are required to submit to the railway board their
revised estimates for the current year and budget estimates for the ensuing year. The revised
estimates are required in respect of the current year and the budget estimates for the
following year. Revised estimates are required where the estimates are already sanctioned
and already the works are executed or which are in progress. These require revision due to
change in the scope of work while execution and requires to incorporate all those scope into
sanctioned estimate.
There is a beautiful system in Indian Railways through which the expenditure required for
next year will be assessed and the accumulated cost from all the zones will be decide for next
year’s Budget.

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Budgeting exercises

The steps involved in presentation of Railway Budget are:-

i. Preparation of budget
ii. Voting of budget
iii. Execution of budget
iv. Review of budget as executed

Voting and Review of budget are parliamentary functions where as preparation and execution
are primarily the function of executive at divisional and higher levels.

The revised and estimate budget should be framed by the various concerned authorities in
keeping with the instructions given below:

1. Gross Receipts
2. Ordinary Working Expenses
3. Payment to Worked lines
4. Appropriations to and expenditure to be met out of Railway Funds
5. Payment to General Revenues
6. Works Expenditure
7. Civil Estimates

4.5.1 Gross Receipts

The estimates of Gross Receipts should be prepared in quadruplicate in the prescribed form
and the figures to be mentioned in thousands of rupees. Gross Receipts includes Coaching
Earnings, Goods Earnings, and Sundry Other Earnings etc. These are the earnings from each
class of passenger traffic, commodities carried, catering etc.

4.5.2 Ordinary Working Expenses

These are the expenses incurred on operations, repairs, maintenance, fuel, staff welfare, staff
benefits etc. The Railway Board should be furnished with the summary of the ordinary
working expenses comparing, under each demand, the actuals during each of the preceding
three years, with budget estimates and revised estimates for the current year and budget
estimates for the ensuing year.

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4.5.3 Appropriations to and expenditure to be met out of Railway
Funds

It comprises various Railway Funds which are budgeted whether for appropriations to or
expenditure from the funds. These include Depreciation Reserve Fund (DRF), Revenue
Reserve Fund (RRF), Development Fund (DF), Pension Fund and Accident Compensation,
Safety and Passenger Amenities Fund (ACSPF). These funds are financed from internal
sources of railways except where in the absence of adequate revenue surplus, temporary loans
have to be obtained from the General Revenues to meet the obligations of Development Fund
and Revenue Reserve Fund. Except in case of Pension Fund and Accident Compensation,
Safety and Passenger Amenities Fund for which revised and Budget estimate are prepared by
and appear in the Budget statements of the individual Railway Administration. The
responsibility of framing the revised and budget estimates for other railway funds lies with
the Ministry of Railways. A brief explanation of these funds is given below:

1. Depreciation Reserve Fund (DRF):

Since Indian Railways is not subject to income tax, they put depreciation amount in a reserve
fund called the Depreciation Reserve Fund. Indian Railways uses this money for meeting the
cost of replacement and renewals of depreciated assets. It was set up in 1924.

2. Revenue Reserve Fund:

Revenue reserve fund if left over after payment to the General Reserve is added to the
Revenue Reserve Fund. If no surplus is available, then temporary loans are obtained from
General Revenues.

3. Development Fund (DF):

It was started in 1946 as ‘Betterment Fund’ and was renamed as Development Fund from
1950. It finances the cost of amenities for passengers and also for labour welfare.

4. Pension Fund:
It is another reserve fund in which Indian Railways contribute a large amount every year. It
was started in 1964.

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 4.5.4 Payments to General Revenues

It arises in respect of dividend on Capital-at-charge, contribution for grants to States in lieu of

passenger fare tax, repayment of loans and interest borrowed on a temporary basis from
General Revenues to finance Development Fund and Revenue Reserve Fund.
Capital-at-charge is given by the General Exchequer through Central Government’s Budget
for which Railway have to pay interest which is termed as dividend.

4.6Compilation and scrutiny of budget in the Railway Board

The estimates of working expenses are subject to critical examination by the Railway Board
and after taking all the relevant factors into consideration, the Railway Board prepare their
own estimate of expenditure. The procedure adopted by the Railway Board in fixing the
allotment for each railway is as follows:
•The revised estimate for the current year is first fixed under each demand for each railway
after taking into the account the expenditure for the preceding year and comparing the
expenditure for the first seven months of the current year with the corresponding period of
the previous year.
•Having thus fixed the revised estimate for the current year, the budget estimate for the next
year is prepared on a consideration of special circumstances so far known for both years.
The estimate of expenditure on rolling-stock, plant and machinery, structural and other
engineering works submitted by the railways after having been carefully examined by the
Railway Board as to the necessity and justification of the works there in are discussed with
the railway administration and the work to be undertaken during the budget year be decided
upon.

4.7 Submission to the Minister

The estimated amount required for Plan expenditure during the next year is intimated to the
Planning Commission/ Ministry of Finance for necessary provision being made in the ‘Way
and Means’ budget of the Government of India and after it has been ascertained from
Planning Commission. The rolling stock and plant and machinery programmes, as approved
by the Minister, are subject to further modifications which may subsequently necessary due
to the following cause:
 If any item of rolling stock and plant and machinery ordered for delivery in the
current year is not delivered before the end of the year and remains unpaid , it

16
 becomes necessary to provide money in the programme for the next year for such
items as will be delivered in that year.
Of the proposed modifications, the important ones, if any, are however, specifically brought
to the notice of the Minister before presentation of the budget to the Parliament. The
estimates of working expenditure as fixed by the Railway Board each railway and those of
expenditure on works, plant and machinery and rolling stock as finally settled are
consolidated under the respective ‘Demand for Grants’ and submitted to the Minister before
presentation to the Parliament.

4.8 Presentation to the Parliament

The complete Budget which includes the ‘Demand for Grants’ and detailed estimates of each
railway along with a summary will be presented to the LokSabha and RajyaSabha by the
Railway Minister. Before the ‘Demand for Grants’ are submitted to the Parliament, the
recommendations of President should be obtained.

4.9Appropriation Bill

After ‘Demand for Grants’ have been voted in the LokSabha, there shall be introduced a bill
to provide for the Appropriation out of the ‘Consolidated Fund of India’ of all money
required to meet the grants so made by the LokSabha and the expenditure, if any, charged
statement previously laid before the Parliament. The Appropriation Bill as passed by the
Parliament and assented to by the President forms the basis of budgetary allocation to the
railways.

4.10 Administering the Budget

Distribution of funds by the Railway Board:

The Grants as voted by the Parliament and the appropriation for the charged expenditure as
sanctioned by the President are distributed by the Railway Board among the Railway
Administrations and other authorities subordinate to them, as soon as possible, after the
Budget is sanctioned. The sums so distributed are called "Allotments" and the orders by
means of which the allotments are made are called "Budget Orders". The allotments made out
of funds voted by the Parliament are shown as "Voted" and those fixed by President are
shown as "Charged". The Budget allotment made to a railway administration is intended to
cover all charges, including the liabilities for past years, to be paid during the year or to be
adjusted in the accounts for it. It shall be operative until the close of the financial year. Under

17
the 'doctrine of lapse', any unspent balance shall lapse and shall not be available for
utilization in the following year. When the Budget Orders issued by the Railway Board show
any reduction in the estimates originally submitted to them, prompt measures should be taken
by the railway administrations to limit the expenditure to the amounts allotted and distributed
by the Railway Board.

Distribution of funds by the General Managers to Lower Authorities

A General Manager is expected to take steps immediately to distribute the funds, placed at
his disposal, to authorities subordinate to him in such manner as he may consider most
suitable, provided that the total of the sums so allocated does not exceed the total of the grant
placed at his disposal. In making this initial distribution, he may, at his discretion keep a sum
unallotted as a reserve for emergencies that may arise in future. He may also vary the initial
distribution as necessity arises during the course of the year. The authorities to whom funds
are distributed by the General Manager may, subject to any general or special instructions
issued by him, redistribute the fund placed at their disposal to the authorities under them. No
expenditure shall be incurred by an authority without the allotment of necessary funds. The
authority to whom the funds are allotted, shall be responsible to report at once to the next
higher authorities the probability of any lapses or excesses over the sums placed at their
disposal. The expenditure on each work shall be limited to the sum allotted for it. If for
exceptional reasons, expenditure in excess of Budget allotment has to be incurred and if the
authority incurring the expenditure is either not in a position to find funds by reappropriation
or is not empowered to sanction a reappropriation therefore, application for additional funds
shall be made to the next higher authority stating how the expenditure is proposed to be met.
The transfer of funds, originally assigned for expenditure on a specific object to supplement
the funds sanctioned for another object is called "Reappropriation". In doing so it should
invariably be explained why the need for the expenditure was not foreseen in time for
inclusion in the budget and why the outlay cannot be postponed to the next financial year.

4.11 Responsibility of Railway Administration in case of Excess or

Lapse

The railway administrations shall be responsible to ensure that no expenditure is incurred in

excess of the Budget allotments made to them. Should it become apparent at any time that the
grant for the year is likely to be exceeded from any cause whatsoever, the General Manager
should report the position to the Railway Board and apply for additional funds. No liability
may be incurred in one year against anticipated grants of a succeeding year. It shall also be
the duty of the administrations to see that the allotments made to them are fully expended, in
so far as is consistent with economy and the prevention of large expenditure in the last
months of the year for the sole purpose of avoiding lapses. They shall be responsible for

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ensuring that money which is not likely to be needed during the year is promptly surrendered
so as to allow of its appropriation for other purposes.

4.12 Powers of Railway Administrations in case of emergent and

inevitable expenditure
In certain cases where the commencement of work is urgently necessary to safeguard life or
property or to repair damage to the line caused by flood, accident, earthquake or other
unforeseen contingency, so as to restore or maintain through communication may be
authorized by the Executive Engineer; but he should at once submit a report through the usual
channel to the authority competent to give administrative approval to the work and to allot
the required funds. Expenditure to meet a sudden increase in traffic or for ensuring the safe
operation of traffic may be incurred with the personal sanction of the General Manager in
anticipation of the allotment of necessary funds by the Railway Board provided that the
Financial Adviser and Chief Accounts Officer concurs. This power cannot be delegated and
can be exercised by the General Manager only where the expenditure is within his powers of
sanction. In all cases where this requires an allotment of additional funds, a report showing
the expenditure involved and the additional funds required should be submitted to the
Railway Board, as soon as possible.

4.13 Powers of the Railway Board

Within the amount of a grant as voted by the Parliament, the Railway Board have full power
of transferring the provision from one sub-head to another by a formal order of
reappropriation, but reappropriations from one grant to another are not permissible. Under
Grant No. 16 no reappropriation of funds is permissible between Capital, Railway Funds and
Revenue even though reappropriation is permissible between the various sub-heads of grant
viz. the various Plan heads. As regards "Charged" expenditure, there are no restrictions on the
powers of the Railway Board to transfer provision from one sub-head to another by a formal
order of reappropriation, but no reappropriation is permissible from one grant to another or
from "Charged" heads to "Voted" heads or vice versa.

4.14 Powers of the Railway Administration

Reappropriations, other than those which require prior board approval may be sanctioned by
the, railway administrations but no reappropriations are permissible after the close of the
financial year, i.e., 31st March. The reappropriations by railway administrations should not
be, made haphazardly on the basis of individual items of expenditure where the original
provision is exceeded, not should they be postponed to be made only towards the end of the
year. The railway Administrations should review the position as a whole at intervals and
carry out the necessary reappropriations. When funds have to be provided for new
expenditure under one of the sub-heads and the administrations are definitely in a position to
transfer the grant from another sub-head for this purpose, the appropriations should be made

19
promptly. The whole object is to ensure that, as far as possible, funds which are not required
are withdrawn from disbursing officers as soon as it is definitely known that they are not
required, and incidentally to provide that any really unavoidable expenditure is met from such
savings as far as possible.

4.15 Unforeseen Expenditure: - operation from the Contingency

Fund of India
Unforeseen expenditure which cannot be met by reappropriation from the existing grant and
expenditure on a “New Service /New Instrument of Service " not contemplated in the budget,
shall be met from out of the balance in the Contingency Fund of India placed at the disposal
of the Financial Commissioner for Railways. New Works estimated to cost more than Rs.50
lakhs each are treated as “New Service/New instrument of Service’. Likewise, relatively large
expenditure arising out of important expansion of an existing activity is treated as ‘New
Instrument of Service’, which is a slight variant of the term ‘New Service’. Applications for
advances required by the Railways shall be made to the Financial Commissioner for
Railways giving the following particulars: -

1. Brief particulars of the additional expenditure involved;

2. The circumstances in which provision could not be included in the Budget;
3. Why its postponement is not possible;
4. The amount required to be advanced from the fund with full cost of the proposal for
the year or part of the year, as the case may be.
So in these ways the various activities for making a budget are exercised by various
authorities. As seen right from bottom level till the top level employees are involved in
preparing the budget which is presented in the Parliament by the Railway Minister.

5. Gist of Railway Budget 2018-19

Announcing the railways component of the annual Budget on Thursday, 1 February 2018,
Finance Minister ArunJaitley allocated Rs 1.48 lakh crore, up from last year’s Rs 1.31
lakh crore.

“We will electrify 4,000 km of railway lines. Around 18,000 km of double line tracks will
also be laid in 2018," Jaitley announced.

“As many as 12,000 wagons, 5,160 coaches and 700 locomotives are being procured.
There are significant achievements of physical targets by Railways,” he added. The
government also announced its intention to increase India's 124 airports to five times that
number.
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The Finance Minister also announced a 'Safety First' policy with allocation of adequate
funds under Rashtriya Rail SanrakshaKosh and a bonanza for suburban commuters in
Mumbai and Bengaluru.
In some good news for Mumbaikars, Jaitley announced that the government would spend
around Rs 11,000 crore on upgrading the city’s train systems. The Mumbai suburban rail
will get 90 additional km of double line.
Following the announcement, Maharashtra Chief Minister DevendraFadnavis expressed
his gratitude to the NarendraModi government, adding that a total amount of Rs 40,000
crore would be dedicated towards “enhancing transportation in the city, with expansion of
suburban railway system & new airports.”

Similarly, Rs 17,500 crore was allocated to develop a 160-km suburban railway network
in and around the Bengaluru.
Additionally, Jaitley said that rail stations with a footfall of more than 25,000 would have
escalators. The redevelopment of 600 major railway stations would also be taken up by
the government. All trains would also soon have state-of-the-art facilities such as WiFi
and closed circuit television (CCTV) cameras, he said.
Further, the government also aimed to do away with 4,267 unmanned crossings in the
next two years. Around 18,000 kiometres of railways tracks are set to be doubled in a bid
to eliminate capacity constraints. “Over 36,000 km of track renewal is being targeted in
2018-19,” said Jaitley.
The Finance Minister also pointed out that 600 stations have been earmarked for
modernisation by the Railways. Laying out a roadmap for the Indian Railways, Jaitley
said the focus would be on modernisation of signalling, use of fog safety devices, better
passenger amenities, and safety in the coming year.
However, no major new trains were announced and the focus was more on modernisation
and passenger safety. The 92- year-old practice of a separate Railway Budget was
discontinued last year and merged with the Union Budget.

 Rs 1.48 lakh crore has been allocated for Indian Railways. Most of this capex will be
dedicated to capacity creation.
 12,000 wagons, 5160 coaches and 700 locomotives are on the way. A major
programme has also been initiated by the government to strengthen infrastructure at
the Goods sheds and fast track commissioning of private sidings.
 Optimal electrification of railway network is a priority. Along with that the
government is focused on Physical targets of Indian Railways and has targeted 4,000
km of commissioning during 2017-18.
 Work on dedicated East and West freight corridors are in progress.
 Government plans to create world-class modern train sets including Train 18 and
Train 20. Train 18 and Train 20 will be manufactured at Integral Coach factory,
Chennai, announced in Union Budget 2018.
 Government plans to eliminate 4,267 unmanned railway crossing in next two years.

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 For Passenger security, Wi-Fi, CCTVs in all stations and trains will be introduced.
 Modern train sets with state-of-the-art amenities are being designed at Integrated
Coach Factory in Perambur and first such train-set will be commissioned during
2018-19.
 For Mumbai local trains, an amount of Rs 11,000 crore has been allocated to add 90
kilometres of double line tracks.
 18,000 km of doubling, third and fourth line works and gauge conversion of 5,000 km
would be done in order to eliminate capacity constraints. In addition to that, complete
conversion of entire network into Broad Gauge to take place.
 Under Rashtriya Rail SanrakshaKosh, a ‘Safety First’ policy is a key for the
government to optimise passenger safety.
 Track infrastructure is necessary and for that the government has targeted over 3,600
km for track renewal.
 Other technology based measures will be taken by the government like ‘‘Fog Safe’’
and ‘‘Train Protection and Warning System’’.
 600 major stations to be redeveloped by Indian Railway Station Development
and escalators will be introduced to railway stations with more than 25000 footfalls.
 In addition, 150 kilometers of suburban network is being planned at a cost of over Rs
40,000 crore, which will include elevated corridors on some sections.
 A 160 kilometers (approx) suburban network at an estimated cost of Rs 17,000 crore
is provided for the growth of the Bengaluru metropolis.
 An institute to train manpower for high speed rail projects will be set up in Vadodara,
as the foundation stone of Mumbai-Ahmedabad bullet train project, India’s first high
speed rail project was laid last year.

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 Railway finance

The railway convention committee is an ad hoc committee constituted from time to time on a
resolution adopted by loksabha and concurred in by rajyasabha.

At present financial commissioner of railway is Shri A K Prasad.

The railway finances where separated from the general finances in India in 1924. By a
resolution adopted in September 1924, the central legislative assembly approved what is
commonly known as “separations convention” providing for a definite annual contribution
from the railways to the general revenues which was to be the first charge on the net receipt
of the railways. The working of the “separation convention” was revised from time to time by
the committees appointed by the legislative assembly.

The railways convention committee constituted in 1949 was the first committee after
independence. since 1954, each loksabha has been having a railway convention committee.
The committee becomes functus officio after presenting its final report regarding rate of
dividend.

Railway Survey
The survey may be defined as an investigation to be carried out before the commencement of
construction of a new Railway line.

To construct anything haphazardly is not engineering. Prior to survey the available maps of
proposed area are studied. This helps in fixing suitable alignment facilitate various surveys
work. The various engineering surveys which are carried out for the choice of route of a new
railway line survey can broadly be divided in to three categories.

1. Reconnaissance Survey
2. Preliminary Survey
3. Location Survey

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 1. Reconnaissance Survey

A reconnaissance survey is the first engineering survey which is carried out in territory
which has not been previously surveyed for the purpose of laying a new railway line. The
main objects of reconnaissance survey are as follows:

 To obtain a general knowledge of the whole territory and

 To obtain information regarding the salient feature of the territory.

Importance of Reconnaissance Survey

By reconnaissance survey, a number of possible alternative routes between two points can be
worked out. This information becomes useful at a later stage in the selection of best possible
route between two points. The successful conduct of the reconnaissance survey entirely
depends on the personal qualities and abilities of engineers such as training and experience,
capacity of observation and interpretation of the features of the territory etc.

Reconnaissance Survey and Information Gathered

The information are generally gathered in the following two categories

 Traffic Reconnaissance Survey

 Engineering Reconnaissance Survey

Traffic Reconnaissance Survey

This consists of collection of the information regarding the following:

1. General character of the country and extent of cultivation

2. Local industries and religious festivals
3. The general conditions such as prosperity of people in the locality and density of
population and its distribution
4. The probable amount of traffic to be served by a new railway line
5. The probable new traffic lines to be opened up to join large trade centers
6. Nature and volume of exports and their destination and origin
7. The amount of imports and centers of their distribution
8. Possibilities of development of new industries and irrigation schemes as a result of new
railway lines

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 Engineering Reconnaissance Survey

Engineering Reconnaissance Survey, the following information is collected

1. Physical features of a country

2. The surface formation of the ground
3. Nature of soil
4. Streams and rivers in the area especially those likely to be crossed by the track, their direction
of flow, approximate width and depth
5. Positions of hills and lakes

2. Preliminary Survey

The object of preliminary survey is

1. To conduct the survey work along the alternative routes (found out by reconnaissance survey)
with the help of theodolite and leveling instruments
2. To determine the greater accuracy the cost of railway line along these alternative routes
involving cost of removing obstruction, construction of bridges etc
3. To decide the most economical and efficient route

Importance of Preliminary Survey

The preliminary surveys decide the final route and recommend only one particular route in
preference to other alternative routes. Thus, the preliminary survey should be carried out with
greater precision as the alignment of final route depends on it.

Works of Preliminary Survey

The x-sections of all representative points along the route and feature of the country are
marked. The cross sections are taken at 500ft interval normally. Similarly where the route
crosses a river, the river is surveyed in detail for about one mile on either the upstream and
downstream sides. The detail maps are prepared and the cost of different alternatives is
calculated accurately to select the most economic routes.

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 3. Location Survey

It is the final survey used to locate the centre line of the railway line the main object of this
survey is to carry out the detaile3d survey along the route which has been fixed as the most
economical route from the data of preliminary survey.

Importance of Location Survey

The location survey established the center line of actual track to be laid and hence as soon as
the location survey is completed, the construction work is started.

Work of Location Survey

The location survey is carried out in two stages

 Paper Location
 Field Location

Paper Location

The final route selected is put up on paper and details such as gradient, curves, contours etc are
worked out. The long sections and formation levels are sorted out and working drawings are
prepared for all small and large structures.

Field Location

The field location transfers the paper location to the ground to have a good profile as in paper
location. It also gives the requirements of the construction engineer such as benchmarks, levels,
measurements etc. The center line pegs are driven at every 1000 ft or 300 m along the center line
of the track. Every change in direction, the beginning and end of a curve and the intersection of
tangents are clearly marked. Sufficient benchmarks are established at a distance not more than ½
miles along the alignment to which levels can be referred and gradients can be transferred. The
center line and other pegs are surrounded by stone masonry or concrete pillars on which the
changes and levels are marked. The center lines of culverts, bridges, tunnels, stations buildings,
yards, signal cabins etc should also be fixed. The construction work should also be possible after
completion of location survey.

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 Estimate

The execution of work in railways include various stages of processing, starting with the
preparation of Abstract Estimate, its concurrence sanction; proportion of detailed, its
concurrence sanction and finally the tender and the agreement.

Financial concurrence include the financial viability with respect to the total cost of work.
Concurrence and verification of an estimate is part of finance function.

An estimate is a statement prepared to gauge an idea of expenditure to be incurred on a

work in order to obtain sanction of the competent authority and also to see that work is
financially justified.

Indian Railways prepare seven kinds of estimates to serve different objectives which are
outlined below:

1. Abstract Estimate : An abstract estimate is prepared

 To enable the competent authority to gauge the necessity, utility and financial
prospectus of a financial proposal.
 It contains a brief justification, report, allocation of the proposed work.
 It furnished the approximate cost of carrying out a work or effecting supply of
material split into stores and cash.
 It specifies the likely completion time of the work.
 Funds required in the current year to commence the work.
 Finally, it is prepared to obtain administrative approval of competent
authority.
 Inclusion of work in Pink Book normally carries administrative approval.

2. Detailed Estimate: A Detailed Estimate is prepared

 To obtain the technical sanction of competent authority.
 It contains a great degree of details of items of work, cost, quantities, and rates of the
proposed work.
 It is prepared based on sanctioned plans/designs and after deciding the method and
scoped of execution of the work.

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  It is prepared in such a detail so that preparation of any other kind of estimate at a
later stage is avoided.

3. Supplementary Estimate: A Supplementary Estimate is prepared

 To include such of those items of work which should have been included in the
original estimate but omitted.
 To take into consideration for inclusion of such items of work whose necessity is felt
during the execution of work.
 It is prepared in same degree, detail and magnitude as that of the detailed estimate and
once sanctioned forms part of the main estimate.
 Competency of sanction should be determined based on the overall cost.

I. Revised Estimate: Revised Estimate is prepared

 It is prepared to take care of the likely excess over sanctioned estimate cost when it is
certain that the work cannot be completed within the sanctioned cost.
 Excess over the estimate may be due to escalation in prices and introduction of
additional items of the work and does not include material modifications which
should be dealt separately.
 Percentage of excess under above two categories over the abstract cost would
determine the competency of sanction.
 Revised Estimates are prepared both in Construction and in open line.
 Reasons for excess/savings under each sub- work should be explained.

II. Project Abstract Estimate: A project Abstract Estimate is prepared

 In respect of construction projects for inclusion of work in the works program.
 This is similar to an abstract estimate prepared for open line works.
 It carries detailed justification, cost, allocation and brief report about the work.
 It is prepared to obtain administrative approval of competent authority.

6. Construction Estimate: A construction Estimate is prepared

 To obtain technical sanction for the estimate.

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  Construction estimate is prepared for each sub work based on the final location
survey.
 Quantities and items are to be firm and accurate.
 Rates should be based on current market rates and realistic.
 Methods of executing work are to be decided technically.

7. Completion Estimate: A completion Estimate is prepared

 To serve as a stock taking estimate after completion of a work.
 It is prepared within 18 months from the end of financial half year in which the work
is completed.
 It compared latest sanctioned cost with actual expenditure.
 It contains further commitments, outstanding bills and cost of balance works to be
undertaken.
 It takes into account the total cost and depicts excess/savings under each sub-work
duly explaining the reasons.
 Competent Authority’s sanction is obtained for the completion estimate.

Tender

The tender is a notice to all business concerns to enable them to give quotations for supply of
stores as well as for execution of engineering works. Such notice in case of large works
should not be less than one month and for other works should not be less than 14 days.

In order to obtain be cheapest, economical and competitive rates tender system is adopted.
There for, while adopting this effective method very careful and serious consideration shall
we made.

Classes of Tenders

Open Tender

 The system of invitation of tenders by public advertisements in the most open public manner
possible should be used as a general rule and must be adopted with certain exceptions
 Wide publicity may be given to the call of tenders by :–
(a) Notices in Railway offices,

29
 (b) Notices in other Got. Offices,
(c) Advertisement in vernacular/local news papers,
(d) Advertisement in National/International newspapers, if work is very important.

Limited Tender

 Where for reasons, which should be in the public interest, it is considered not
practicable or advantageous to call for open tenders, limited tenders may be invited
with approval of the competent authority. The reasons for inviting Limited tenders
from firm/contractors should be kept on record while approaching finance for
concurrence.
 Board vide their letter No. 2007/C-1/CT/18 dated 28.09.2007) have decided that Civil
 Engineering works up to Rs. 5 Crore for both open line and construction project may
be awarded on the basis of limited tenders. For this purpose, a list of approved
contractors should be properly maintained and tenders called only from amongst the
contractors borne on the approved list.

 The schedule of power will be as under :-

OFFICER POWERS FOR LIMITED TENDERS

SAG, PHOD/CHOD over Rs. 1 Cr. & up to Rs. 5 Cr.

DRM/SAG Over Rs. 25 lakhs & up to Rs. 1 Cr.

JAG/SG Up to Rs. 25 lakhs

While exercising powers above, the following conditions should be fulfilled.–

(a) The minimum number of contractors to be borne on the approved list should not be less
than 10 (Ten)

(b) The approved list of contractors should be up-dated annually, without fail.

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(c) Notwithstanding the provisions above, the Railway may invite open tenders in the
following circumstances:-

(i) In the event of in-sufficient response to the tender from the contractors borne on the
approved list.

(ii) When the work is of special nature and contractors with requisite experience are not
available on the approved list, and

(iii) When ring formation is suspected.

 Limited tenders may be invited from all the contractors borne on the approved list
and not restricted to 10 numbers of contractors
 The tender notices should be sent by registered post or under certificate of posting or
handed over to the parties concerned and their clear acknowledgement obtained.
 Special Limited Tenders: –Limited Tenders called from contractors not in approved
list –Finance concurrence& GM’s approval.

Single Tender

 Calling of single tender should be resorted to only in exceptional circumstances after

recording necessary certificates that:
i. It is not in the public interest to call for tenders.
ii. The demand is urgent.
iii. No other suitable contractor is available to execute the work.
iv. It should also be recorded as to why single tender is being resorted to in
preference to limited tenders.
 It should be ensured that prior financial concurrence is invariably obtained before
obtaining single tender, which should not be below the level of SAG Officers. The
offer should as usual be considered by the Tender committee before acceptance by
the competent authority viz. GM.

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 Global Tender

This system is adopted by Railway Board or the Government of India for purchases
throughout the world. For this type of tenders the General Managers of Zonal Railways and
the Administration under them have no powers.

Contract
Under the Contract Act, 1872, when two or more persons have a common intention
communicated to each other to create some obligation between them it is said to be an
agreement. Such agreement which are enforceable by law are known as ‘contract’. “only
those agreement are enforceable by law which are made by free consent of parties, competent
to contract for lawful consideration and with lawful object and are not expressly declared to
be void.

Type of Contracts
1. Works contracts
2. Stores contracts

FORMS OF WORKS CONTRACTS

Lumpsum Contract

The Lumpsum contract is a contract under which the contractor is engaged to carry out a
work or effect supply as specified and within a given period for a fixed total sum; his
receipt of this sum being dependent on his completing the work or supply to specification
and time; irrespective of the actual quantities and kinds of work done or materials
supplied in achieving his results. In the case of such contracts a scale of rates or prices
may be agreed upon by which enhancement or reduction from the Lumpsum may be
regulated in the event of any departure from the work or supply as specified being made
subsequently under the order of competent authority; or by which reductions may be
made, at the discretion of competent authority for failure on the contractor's part to
confirm to specification.

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 Schedule Contract

The schedule contract is a contract under which the contractor is engaged to carry out a
work or effect supply as specified within a given period, at fixed unit rates or prices for
each of the various items comprising such work or supply, the sum be is to receive
depending on the actual quantities and kinds of work done or materials supplied in
completing the work or supply to specification and time. It is not repugnant to the above
definition to show in such contracts the approximate amount of the contract, based on
approximate quantities and the fixed unit rates.

Piece Work Contract

This means a contract under which only unit rates or prices for various kinds of work or
materials are agreed upon, without reference either to the total quantity of work to be
done or material supplied; within a given period. The zonal contract adopted on the
Railways fail under this category.

Bills Payable and Bills Receivable

A statement of claims in prescribed form prepared by the firm for the supplies made or
services etc. rendered or by railway administration for recovery of charges from outsiders are
known as Bills.
Bills which are payable by railways are referred to as “bills payable” and which are
recoverable for the service render by railways are known as bills receivables.
Bills payables are: vendor’s bills, rent bills, petty purchase bills, and other miscellaneous bills
Bills receivables are: lease and licence, actual maintenance charges for sidings and level
crossings, on level crossing and wages of gateman, water charges bills and other
miscellaneous bills.

Measurement Books

The observance of rules regarding maintenance of these books as prescribed and also printed
in the measurement books should be seen. As these are important books required to be
produced in a court of law if occasion arises, the maintenance of these books strictly
according to instructions should be checked. The instruction for safe custody of completed or
standard measurement books are rigidly followed the calculation of actual measurement
should be checked and verified with paid contractors bills related to month selected for
check.

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 CONCLUSION
A budget is a list of all planed revenues and expenses. Budget is important to Indian
Railways as it has a vast operational system spread across the length and breadth of the
country. It enables the actual financial operation of the Railways to be measured against the
forecast. Every year the Railway Minister presents the Railway Budget in the parliament in
the month of February. Railways in India dawned in 1853 and ever since its origin, it has
never turned back As per the recommendations of the Acworth Committee, the railway
finances were separated from the general finances of the government through a ‘Separation
Convention’ in 1924 and hence Railway Budget is separately presented in the parliament
before the General Budget. Today Railways has over 64,000 route kilometres across India
and is considered as the ‘Lifeline of the country’. For proper planning, decision making and
allocation of resources, proper budgeting is necessary. Budgeting in Railways is not a day’s
or a week’s job. It involves many people and has many steps and procedures which need to
be followed systematically so that the Railway Minister can present a sound and a competent
budget in the parliament but now after merger of railway budget with the union/ annual
budget it is now presented by finance minister. The role of competent workforce and proper
flow of information is most necessary to make a good budget. Indian Railways’ budget boasts
about huge figures which is definitely higher than the budget of many small nations. Through
this project, we will briefly look into the budgetary activities and procedures involved which
makes up a good budget. We will also discuss the gist of the Indian Railways’ Budget 2018-
19. FM ArunJaitley in his Union Budget 2018 speech said that developing infrastructure –
including railways – would continue to a priority for the Modi government. From world-class
train sets to bullet trains and revamp of signalling systems and providing CCTVs and Wifs –
FM Jaitley’s portion of Union Budget speech dedicate to Railway Budget helped several
promises that aim at transforming Indian Railways. Last year, for the first time in
Independent India, finance minister ArunJaitley presented the combined Fiscal Budget 2017-
18 in the parliament as the 92 year old custom of presenting separate railway budget and
general budget was removed. Suresh Prabhu, the former Railway minister before
PiyushGoyal, became the last railway minister under the Modi regime to announce the
Railway budget separately. Indian Railways which is the national mode of transport is a
massive sector in terms of economy and employment. Every year an impressive amount is
provided by the government for the development of Railways and to improve Rail network
across India.

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 Bibliography

 www.indianrailways.gov/railwaybudget
 www.indianrail.gov.in
 www.financialexpress.com
 www.business-standard.com
 Railway Financial Rules by K P Sharma
 Work hand book- GCC- Indian railways
 Railway accounting, finance and administration

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