End of 92yr old practice: Railway Budget is now a part of main Budget

Ending a 92-year-old practice, the government will not present a separate rail budget from the next financial year. The Cabinet Wednesday approved the merger of the rail budget with the general budget along with an in-principle agreement to advance the presentation date of the budget in Parliament from the usual last working day of February.

“Cabinet has decided that rail budget and general budget will amalgamate. There will be only one budget, which will be the general budget and all proposals with regard to the railways will be part of the general budget. Consequently, there will be only one appropriation bill,” Finance Minister Arun Jaitley said during a briefing on Cabinet decisions taken Wednesday.

The final decision regarding the presentation date of the Union Budget for 2017-18 (April-March) will, however, be taken after consulting states on their scheduled assembly elections, Jaitley said.

“While we are in principle in favour of advancing the budget date and finishing the entire financial business before March 31… the actual dates will be decided after consultations, depending on the calendar of state elections,” he said.

The Cabinet also decided to remove the classification of plan and non-plan expenditure in the budget 2017-18 along with the decision of no dividend by railways from the next financial year.

One of the enabling steps for the advancement would be the decision of the Central Statistics Office (CSO) to provide the Finance Ministry with provisional advance estimates of national income or GDP by January 7 so that they can incorporate the data in preparation of the budget.

Economic Affairs Secretary Shaktikanta Das said the provisional GDP advance estimate is likely to be in line with the final advance estimate, which is usually released by CSO in February.

On queries regarding the functional autonomy of railways after the merger of the two budgets, Railway Minister Suresh Prabhu said that there will be no loss of autonomy and such a step will, in fact, boost capital expenditure. “One single budget will mean railway and general budget will work in harmony,” Prabhu said.

The Finance Ministry, Das said, will issue a budget circular for ministries in a day or two.

As per tradition, the budget is presented on the last working day of February. A separate railway budget was started by the British in 1924.

Citing the report of a committee headed by NITI Aayog member Bibek Debroy, Jaitley said that the committee had observed that presenting a separate railway budget is only a ritual even though its size has become very small compared to the general budget. He said the government will continue to maintain the distinct identity of the railways and its functional autonomy.

“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,” Jaitley said.

Asked who will decide the passenger fares and freight rates, Jaitley said: “These decisions will continue to be taken by the Railways. But the accounts of railways will be presented to Parliament by the Finance Minister. Presentation of statement of accounts will be consolidated, so there will be a horizontal merger of the two accounts.”

Das said railways meets its expenditure, including payment of salary and pension, from its income and there would be no change in this because of the merger of accounts with the general budget.

The Centre will continue to provide subsidy which it has been giving to the railways.

A joint committee set up to finalise the modalities for the merger of the rail budget with the general budget in its report this month had recommended various changes including waiving the payment of dividend by the railways and continuation of gross budgetary support.

Source: ENS

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