Indian Railways employs over 11 lakh people, runs more than 13,000 passenger trains daily and manages one of the largest rail networks on earth. Running an organisation of this scale requires a bureaucracy to match, and the railways has one of the most elaborate administrative structures in the country: zones, divisions, production units and a Railway Board at the top. For 92 years, it also had something no other ministry possessed, its own separate Budget presented in Parliament. In 2016, that tradition ended with the merger of the Railway Budget into the General Budget. This explainer maps how the railways is run and what the merger changed.

Zones and divisions: the operating structure

The network is divided into zones, each headed by a General Manager, and each zone into divisions headed by Divisional Railway Managers. There are 18 zones, including the newest, South Coast Railway, and each division is the basic unit of operations: it runs the trains, maintains the tracks, manages stations and handles commercial work in its territory. Zones plan and coordinate, divisions execute. Alongside them sit the production units, the Integral Coach Factory in Chennai, Rail Coach Factory in Kapurthala, Modern Coach Factory in Raebareli, and locomotive works in Chittaranjan, Varanasi and Madhepura, which build the rolling stock. This structure dates to the regrouping of the colonial-era railways in the 1950s, and its logic is geographical: a division manager can reach any point in the division within hours.

The Railway Board and the ministry

At the apex sits the Railway Board, headed by the Chairman and CEO, with members overseeing infrastructure, operations, finance, rolling stock and human resources. The Board functions as both the corporate board and the top ministry bureaucracy, an unusual dual role. Below it, the two great services, the Indian Railway Traffic Service and the engineering and accounts services, supply the managerial cadre, recruited through the civil services examination. The railways also runs its own schools, hospitals, housing colonies and sports teams, making it something between a transport company and a parallel state. Reform committees have repeatedly recommended corporatising parts of this structure, but the integrated model has survived.

The separate Railway Budget: why it existed

The convention of a separate Railway Budget dated to 1924, when the British administration accepted that railway finances should be kept distinct from general government finances. Every February, the Railway Minister presented a budget detailing fare proposals, new trains and investment plans, and it became one of Indian politics’ great annual rituals, with ministers announcing trains for their home constituencies. Over time, the budget became a vehicle for populism: fares were frozen for years while costs rose, and the announcement of unviable new trains pleased MPs while straining operations. By the 2010s, the railways’ finances were under severe stress, with the operating ratio, the share of revenue spent on working expenses, hovering near 98 paise per rupee earned.

What the 2016 merger changed

The NITI Aayog-backed decision to merge the Railway Budget with the General Budget, implemented from 2017-18, ended the annual fare-and-trains ritual. Railway finances are now presented as part of the Union Budget, which freed the railways from the compulsion to announce populist measures every February and allowed multi-year capital planning. The centre began funding railway investment directly through budgetary support, which has since grown enormously, funding the DFCs, station redevelopment, Kavach and track renewal. The railways no longer pays a dividend to the government, a colonial-era levy. Critics note that the merger reduced Parliament’s focused scrutiny of railway finances, but few dispute that it ended the era of the budget as a political tamasha.

Life after the merger

Freed from the annual budget theatre, the railways shifted to mission-mode capital expenditure: record track laying, electrification of the broad-gauge network, and new trainsets. The operating ratio improved as freight earnings recovered, though the passenger segment remains heavily subsidised, the railways recovers only about half the cost of a passenger ticket on average. The big unresolved question is structural: whether the railways should separate infrastructure from operations, allow genuine private competition in train running, and corporatise production units. Committees have recommended all of these; implementation has been piecemeal. The merger fixed the budgeting ritual, but the deeper reforms of the railway as an organisation remain a work in progress.

FAQs

How many railway zones does India have? Indian Railways has 18 zones, each divided into divisions that handle day-to-day operations.

When was the Railway Budget merged? The separate Railway Budget was merged into the General Budget from the 2017-18 fiscal year, ending a 92-year-old tradition.

What is the operating ratio? It is the share of revenue spent on working expenses; a ratio near 100 means the railways spends almost everything it earns on running costs.

Indian Railways is a 19th-century organisation trying to run a 21st-century network. Its zones and divisions still move the trains; the end of the separate budget freed it to plan beyond February. What comes next depends on whether deeper structural reform follows the financial one.

Compiled by the Khabar 24h Editorial Desk from publicly available sources.