India brings railways under unitary budget

The Centre will merge its railway budget with the annual union budget from the next financial year, ending a nearly century-long practice and easing the way for the government to cut populist subsidies and push through structural reforms.

The world's fourth-largest rail network employs around 1.3 million people, paying an annual net dividend of around 40 billion rupees ($596.81 million) to the government. The practice of a separate railway budget dates back to the pre-independence days, when the network was a major industrial asset and revenue earner.

The railways will no longer have to pay a dividend to the government post merger, Finance Minister Arun Jaitley told reporters following the cabinet decision. Subsidies on passenger fares cost more than $4 billion a year, analysts estimate.