Livemint: September 21, 2016
New Delhi: The Union Cabinet on Wednesday approved the merger of railway budget with the general budget ending a 92-year-old practice of having two separate budgets and agreed, in principle, to advance the presentation of the budget from late February (usually the last or penultimate day of February).
This is the second major shift in the schedule of the budget by a National Democratic Alliance (NDA) government. The previous NDA government, under prime minister Atal Bihari Vajpayee in 2001, changed the time of presenting the budget to 11am, from the British era practice of presenting it at 5pm.
The government hopes advancing the date will help initiate revenue mobilization and capital expenditure measures right from the beginning of the fiscal year.
Briefing reporters after the Cabinet meeting, finance minister Arun Jaitley said all proposals of railway budget will be part of the general budget. “However, functional autonomy of railway will be maintained. There will also be separate discussion on railway expenditure each year in the Parliament,” he added.
The move follows a suggestion to the effect by Niti Aayog member Bibek Debroy in his report on restructuring the public transport behemoth.
A committee headed by Debroy last year recommended that the railway budget should be phased out progressively and merged with the general budget.
Jaitley said the Cabinet has also in principle agreed to advance the date of presentation of the general budget to make sure the budget is passed by Parliament by 31 March, before the new financial year begins on 1 April. He added that the Cabinet has deferred a final decision on the date of presentation to a later day. “A final call on the actual date of the budget presentation will be taken after consultations depending on the calendar of state assembly elections next year.”
This also means the budget session of the Parliament will be advanced. Usually, the budget session begins in the last week of February and runs till mid-May with a recess in between. Both houses of Parliament clear the appropriation bill only in the second half of the budget session, forcing the government to seek Parliament’s approval through a vote on account in March to withdraw money from the consolidated fund of India for two to three months to meet regular expenditure.
The date of presentation of the budget may see another change after the Shankar Acharya committee, tasked to examine the desirability and feasibility of having a new financial year, submits its report. The committee has been asked to submit its report by 31 December.
Currently, India follows the April-March fiscal year and all macroeconomic and company data, including the government’s budget, are compiled and prepared for the same period.
Most countries follow a January-December financial year.
The Cabinet also decided to abolish the distinction between Plan and non-Plan expenditure from next fiscal year (2017-18) onwards as the 12th Five-Year Plan (2012-17) ends this fiscal, replacing it with capital expenditure and revenue expenditure to better differentiate between asset creating and government expenditure.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.