Cabinet okays advancing the date, doing away with plan/non-plan distrinction
GN Bureau | September 21, 2016
Doing away with yet another long-standing tradition, the cabinet has decided to do away with the railway budget – a tradition started in colonial times. Also, the merged budget will be presented earlier than the traditional February-end time line. The third major aspect of the “budget reforms” cleared on Wednesday is to merge the plan and non-plan expenditures in the union budget.
Railway budget no more
The government has clarified that the railways will continue to maintain its distinct entity – as a departmentally run commercial undertaking as at present. The railways will retain its functional autonomy and delegation of financial powers, an official statement said. The existing financial arrangements will continue wherein railways will meet all its revenue expenditure, including ordinary working expenses, pay and allowances and pensions etc. from its revenue receipts.
The capital at charge of the railways, estimated at Rs.2.27 lakh crore on which annual dividend is paid by it, will be wiped off. Consequently, there will be no dividend liability for the railways from next year and the ministry will get gross budgetary support. This means the railways will no longer have to pay about Rs.9,700 crore annual dividend to the government.
The presentation of a separate railway budget started in 1924, and has continued after independence as a convention, though there is no constitutional provision for it.
The government’s rationale for merger is based on the following points:
Budget date advanced
The cabinet has also approved, in principle, for advancement of the date of budget presentation from the last day of February to a “suitable date”. The exact date for the next year would be decided keeping in view the date of assembly elections in Punjab, Uttarakhand, Uttar Pradesh Manipur and Goa.
This, according to the government, would help in following ways:
Plan and non-plan classification goes
Though there will be no plan and non-plan classification in budget and accounts from 2017-18, earmarking of funds for SC sub-plan, tribal sub-plan and the allocations for the northeastern states will continue. This is expected to help in resolving the following issues:
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