New Delhi, Dec 20 (PTI): Arun Jaitley, who will be presenting the first combined general and railway budget in February, said on Tuesday that rail commuters must pay for the service they receive and Indian Railways should focus on running trains, not catering services.

He said that, year after year, the success of the Railway Budget was measured by subsidies given to passengers and the number of announcements about new trains.

“Railways got caught in a battle where populism prevailed over performance and the basic principle on which any commercial establishment is to be run, the first essential principle is that consumers must pay for the services that they receive,” he said.

Speaking at a conference on Accounting Reforms in Railways organised by the Confederation of Indian Industry, Jaitley said unless Indian Railways strengthens its performance and internal management system, it will lose out to competition from highways and airlines in passenger and cargo transportation.

“The core competence of railways is really to drive trains, to provide those services. Hospitality may not be the core competence of the railways and therefore, what is not within its core competence, the principle of outsourcing -- which is accepted world over -- can be a logical addition to those activities of railways,” Jaitley said.

Citing example of power and highway sectors which started doing well only after consumers paid for services they got, Jaitley said that, the world over, only those services have succeeded where there is a financial model which says that consumers pay for what they receive.

“(But) We turned this whole theory upside down by a self imposed indiscipline that populism requires that I require that consumers not to pay for service that they receive. Therefore any establishment will start crumbling in its own weight and contradictions,” he said.

Last September, the government decided to scrap the 92-year- old practice of presenting a separate railway budget and decided to present a combined general and railway budget for 2017-18 on February 1, 2017.

Jaitley said that the shift towards accrual system of accounting from cash system will better reflect its performance.

“Your accounting systems really must reveal more instead of concealing the reality. What is the kind of investment in infrastructure that is coming in, what is the kind of investment in railway safety, what is the kind of outcome of outlay that you have planned, I think those accounts must really reflect the reality,” he said.