Railway budget is history. Here’s the rationale behind ‘budget reforms’

Cabinet okays advancing the date, doing away with plan/non-plan distrinction

GN Bureau | September 21, 2016


#Indian Railways   #Finance Ministry   #Railway   #Economy   #Reforms   #Budget   #Rail Budget  


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:
 

  • 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.


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:
 

  • The advancement of budget presentation by a month and completion of budget-related legislative business before March 31 would pave the way for early completion of the budget cycle and enable ministries and departments to ensure better planning and execution of schemes from the beginning of the financial year and utilisation 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.


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:
 

  • 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 the centre as well as the states 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.

Comments

 

Other News

Thackeray launches three fast-track DNA units under Nirbhaya scheme

Maharashtra chief minister Uddhav Thackeray has launched three state-of-the-art human DNA units under the Nirbhaya Scheme for efficiency in criminal investigations. A wildlife DNA unit in Nagpur makes Maharashtra the country’s first state to have a forensic testing lab for animals.  

How foreign policy has been Modi’s focus right from the start

The Midway Battle: Modi’s Roller-coaster Second Term By Gautam Chintamani Bloomsbury / 400 pages / Rs 699 Gautam Chintamani, a film historian and author, has penned an in-depth chronicle of prime minister Narendra Modi’s second

Remove unauthorized constructions without pressure: Thackeray to BMC

Maharashtra chief minister Uddhav Thackeray has instructed the Mumbai civic authorities to take immediate action on unauthorized constructions on war footing. In a virtual meeting held on Wednesday, Thackeray said no illegal construction will be tolerated in Mumbai and called upon the BMC to

Covid norms relaxed; Mumbai restaurants, shops to remain open longer

After extending timings of shops and restaurants as well as the reopening of cinema halls and theatres under specified SOPs from October 22, in view of the festive cheer, the Maharashtra government has allowed restaurants and eateries to remain open till 12AM and shops and establishments to function till 1

Global Hunger Index data collection flawed: Arvind Panagariya

Rubbishing the recently released Global Hunger Index 2021, wherein India has slipped to 101 position to be placed below Pakistan, Nepal and Bangladesh, Arvind Panagariya, professor of economics at Columbia University and former vice chairman, NITI Aayog, has said that data collection and methodologies used

‘Blue Zones’ concept of healthy living and its relevance in India

A long life span free from diseases and disability, the so-called healthy aging, has been a matter of prime interest to humanity. It is widely held that the life expectancy is a function of interplay between various genetic and environmental factors. There is scientific evidence to support the fact that on

Visionary Talk with Dr Arvind Panagariya, Professor, Columbia University & Former VC, NITI Aayog



Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter