Railway Budget 2026: The central government has completed its preparations for presenting the country’s general budget. Despite February 1, 2026, being a weekly holiday, the central government will present its financial budget. Finance Minister Nirmala Sitharaman will present her ninth consecutive budget. She presented her first budget in 2019.
Along with the general budget, the railway budget is also presented. Now, the Modi government presents both the general and railway budgets together. One of the most significant reforms in India’s budget history was the merger of the railway budget with the general budget.
The Modi government ended a 92-year-old practice. According to reports, since 2017, the railway budget has been presented along with the central budget. The first combined budget was presented on February 1, 2017, by the then Finance Minister Arun Jaitley.
Why was the railway budget presented separately before?
The tradition of presenting a separate railway budget is quite old. This tradition was started by the British government in 1924. This decision was implemented after the recommendations of the Acworth Committee. At that time, the Indian Railways accounted for approximately 84 per cent of the total government expenditure. Therefore, managing it under the general budget was considered too large and difficult.
Railways’ dominance in the economy
In pre-independence India, the railways were considered the backbone of the economy. Freight transport, passenger travel, military logistics, and revenue were all heavily dependent on the railways. This significant financial impact justified a separate railway budget.
What changed over the years?
With economic diversification and the rise of other sectors, the railways’ share of the total budget gradually decreased. By 2016, Indian Railways accounted for only about 15% of the total government expenditure. Maintaining a separate budget no longer served any practical purpose.
For your information, in 2016, a committee headed by NITI Aayog member Vivek Debroy recommended merging the railway budget with the central budget. The government accepted the proposal, citing the need for simplification, transparency, and better financial management. This decision formally ended a tradition that had been in place since 1924.
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Benefits of the Railway Budget Merger
This merger has yielded several benefits. It has simplified the budgeting process and allowed the Ministry of Finance to allocate resources more efficiently. A major relief for Indian Railways was that it no longer had to pay an annual dividend to the central government. This freed up funds for infrastructure upgrades, safety improvements, and modernisation.