Ending a 92-year-old tradition, the Union Cabinet on Wednesday decided to merge the Railway budget with the General budget and agreed in-principle to advance the date of its presentation in Parliament from the usual February end.
The Union Cabinet has approved the proposals of Ministry of Finance on certain landmark budgetary reforms relating to (i) the merger of Railway budget with the General budget, (ii) the advancement of the date of Budget presentation from the last day of February to the 1st of February and (iii) the merger of the Plan and the Non-Plan classification in the Budget and Accounts. All these changes will be put into effect simultaneously from the Budget 2017-18.
The unanimous decision – to scrap over nine-decade old tradition of separate Railway Budget – was taken after Finance Ministry had proposed to restructure the entire budgetary system.
“We are merging the union budget with the Railway budget. There will be only one budget. The functional autonomy of the Railway to be maintained,” Union Finance Minister Arun Jaitley said.
He said, “Debroy panel had recommended merger of Rail with general budget.”
The end of a separate Budget will be a relief for the Railways, since its revenue deficit and capital expenditure will now get transferred to the Finance Ministry.
The country’s largest employer has to bear an additional burden of about Rs. 40,000 crore on account of implementation of the 7th Pay Commission awards, besides an annual outgo of Rs. 33,000 crore on subsidies for passenger service.
Economic Affairs Secretary Shaktikanta Das said the Central Statistical Organisation (CSO) will provide provisional Advance Estimates of national income or GDP by January 7, so that the data could be incorporated in preparation of the budget.
The provisional advance estimates, he hoped, would be in line with the one normally released by February 7.
Mr. Das said the government would issue budget circular in a day or two.
Accordingly, the beginning of budget preparation will be advanced to early October and GDP estimates made available on January 7 instead of February 7 now.
The Cabinet also approved removal of distinction between Plan and Non-Plan expenditure as the present classification resulted in excessive focus on former with almost equivalent neglect to items such as maintenance which are classified as non-Plan.
The Cabinet felt it is the 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.
