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 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.
to provide appropriate budgetary framework having focus on the revenue, and capital expenditure.
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