Press Information Bureau
Government of India
Ministry of Finance
21-September-2016 15:59 IST
Cabinet
approves merger of rail budget with general budget;
advancement
of budget presentation and merger of plan and non-plan classification in budget
and accounts
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.
Merger
of Railway Budget with the General Budget:
The
arrangements for merger of Railway budget with the General budget have been
approved by the Cabinet with the following administrative and financial
arrangements-
(i) The
Railways will continue to maintain its distinct entity -as a departmentally run
commercial undertaking as at present;
(ii)
Railways will retain their functional autonomy and delegation of financial
powers etc. as per the existing guidelines;
(iii)The
existing financial arrangements will continue wherein Railways will meet all
their revenue expenditure, including ordinary working expenses, pay and
allowances and pensions etc. from their revenue receipts;
(iv)The
Capital at charge of the Railways estimated at Rs.2.27 lakh crore on which
annual dividend is paid by the Railways will be wiped off. Consequently, there
will be no dividend liability for Railways from 2017-18 and Ministry of
Railways will get Gross Budgetary support. This will also save Railways from
the liability of payment of approximately Rs.9,700 crore annual dividend to the
Government of India;
The
presentation of separate Railway budget started in the year 1924, and has
continued after independence as a convention rather than under Constitutional
provisions.
The
merger would help in the following ways:
· The
presentation of a unified budget will bring the affairs of the Railways to
centre stage and present a holistic picture of the financial position of the
Government.
·
The merger is also expected to reduce the procedural requirements and instead
bring into focus, the aspects of delivery and good governance.
·
Consequent to the merger, the appropriations for Railways will form part of the
main Appropriation Bill.
Advancement
of the Budget presentation:
The
Cabinet has also approved, in principle,
another reform relating to
budgetary process, for advancement of the date of
Budget presentation from the last day of February to a suitable date. The
exact date of presentation of Budget for 2017-18 would be decided keeping in
view the date of assembly elections to be held in States.
This
would help in following ways:
· The
advancement of budget presentation by a month and completion of Budget related
legislative business before 31st March would pave the way for early
completion of Budget cycle and enable Ministries and Departments to ensure
better planning and execution of schemes from the beginning of the financial
year and utilization of the full working seasons including the first quarter.
· This
will also preclude the need for seeking appropriation through 'Vote on Account'
and enable implementation of the legislative changes in tax; laws for new
taxation measures from the beginning of the financial year.
Merger
of Plan and Non Plan classification in Budget and Accounts:
The
third proposal approved by the Cabinet relates to the merger of Plan and Non
Plan classification in Budget and Accounts from 2017-18, with continuance of earmarking
of funds for Scheduled Castes Sub-Plan/Tribal Sub-Plan. Similarly, the
allocations for North Eastern States will also continue.
This
would help in resolving the following issues:
· The
Plan/Non-Plan bifurcation of expenditure has led to a fragmented view of
resource allocation to various schemes, making it difficult not only to
ascertain cost of delivering a service but also to link outlays to outcomes.
·
The bias in favour of Plan expenditure by Centre as well as the State Governments
has led to a neglect of essential expenditures on maintenance of assets and
other establishment related expenditures for providing essential social
services.
·
The merger of plan and non-plan in the budget is expected to provide
appropriate budgetary framework having focus on the revenue, and capital
expenditure.
