India’s Budget Process Gets Overhauled
Cabinet approves merging of railway budget with general budget.
The Cabinet on Wednesday cleared the merger of the Railway Budget with the Union Budget, advancement of the Budget presentation and scrapping of the plan and non-plan expenditure distinction.
Railway Budget Scrapped
The Railway Budget will be scrapped, and all proposals with regard to the Railways will be a part of the General Budget, Finance Minister Arun Jaitley said in a press briefing. The functional autonomy that Railways enjoys will continue, he added.
With the merger of the budgets, the Indian Railways will be able to use the Rs 10,000 crore it currently pays the government as dividend for capital expenditure, Railway Minister Suresh Prabhu said at the same briefing.
The government will also take an initiative to ensure that there is a separate discussion on the Railways’ expenditure each year so that there is an element of detailed Parliamentary scrutiny and accountability.Arun Jaitley, Finance Minister
Earlier this year, a committee headed by NITI Aayog member Bibek Debroy, in a report titled ‘Dispensing with the Railway Budget’, recommended that the Railway Budget should be merged with the General Budget.
Budget Process Advanced
The government is in favour of passing the Finance Bill before March 31, said Jaitley. The exact date of presentation of the Budget will depend on the schedule of state assembly elections, he added.
We should move away from the current practice when (certain indirect tax) proposals come into effect from June 1. ..The government is in-principle in favour of advancing budget date and budget session. However, the specific date for the Budget will be decided after taking into account the calendar for assembly elections.Arun Jaitley, Finance Minister
Currently, the Union Budget only gets passed by May and most expenditure by the government takes place in the third or fourth quarter of the financial year.
This change will help implementation of budget proposals from the start of the financial year in April, instead of June currently, Steel Minister Chaudhary Birender Singh said at another event in New Delhi.
Plan/Non-Plan Distinction To End
The Cabinet headed by Prime Minister Narendra Modi also approved removal of the distinction between plan and non-plan expenditure.
The plan was mooted by Jaitley in his 2016-17 Budget speech. He said the government intended to do away with the distinction starting fiscal year 2018.
Jaitley had also said that the finance ministry will work with the state finance departments to align central and state budgets. After the scrapping of plan/non-plan expenditure, administrative expenses are likely to be classified as revenue expenditure and money spent on grants for creation of assets may be classified as capital expenditure, former Finance Secretary Ratan Watal said at a meeting of finance secretaries of states and union territories.