From next year, there will be no separate Rail Budget. The Union Cabinet on Wednesday decided to end the 92-year-old practice by giving its approval to the merger of the Rail Budget with the General Budget. The presentation of the General Budget too will be advanced from the last day of February. The date will be decided taking into account when the Assembly elections in States would be held. The presentation of a separate Rail Budget started in 1924 and has continued after Independence as a convention rather than under constitutional provisions.
As part of a major change in the budget process, the Cabinet headed by Prime Minister Narendra Modi also decided to do away with classifications of expenditure into Plan and Non-Plan, making the exercise simpler.
Briefing reporters, Finance Minister Arun Jaitley said the Cabinet has in-principle decided to end the colonial-era tradition of presenting budget on last day of February and advance it to help complete the legislative approvals for the annual spending plans and tax proposals before the beginning of the new financial year on April 1.
But the actual date of presentation of the budget for 2017-18 will be decided later keeping in mind the schedule for Assembly elections in crucial States like Uttar Pradesh, he said, while addressing the media along with Railway Minister Suresh Prabhu.
The Finance Ministry had proposed to the Cabinet that the annual budget presentation be fixed for February 1 and complete the budget exercise by March 24. At present, the Budget approval process happens in two parts extending to the second or third week of May, hampering early implementation of schemes and spending programmes.
“While we in-principle are in favour of advancing the budget date and finishing the entire financial business before March 31... The actual dates will be decided after consultations depending on calendar of the State elections,” he said.
To facilitate early presentation of the budget, his Ministry has proposed that the Budget Session of Parliament be convened sometime before January 25, a month ahead of the current practice. Consequently, the preparation for the budget would start now in early October and GDP estimates made available on January 7 instead of February 7. With the merger of the Rail Budget there would be a single budget which would holistically depict the financial position of the Government of India.
Railway Minister Suresh Prabhu said the merger of the two budgets will not impact the functional autonomy of the Railways but help in enhancing capital expenditure. “One single budget will mean Railway and General Budgets will work in harmony,” said Prabhu, adding Railways will not have to pay dividend to the Government.
It will also lead to a single Appropriation Bill, including the estimates of Ministry of Railways, saving time of Parliament by not having to hold separate consideration and passing of two such bills.
The Cabinet also approved removal of distinction between Plan and Non-Plan expenditure. The classification resulted in excessive focus on the former and neglect of items such as maintenance which are classified as Non-Plan.
The Cabinet felt it is total expenditure, irrespective of Plan or Non-Plan, that generates value for the public. Plan expenditure was for the first time presented separately in the budget for 1959-60.
Plan and Non-Plan expenditure in Budget 2017-18 will be replaced with ‘capital and receipt’.