In what can be called as landmark budgetary reforms, Cabinet on Wednesday merged the Railway Budget with the general Budget. The reforms also include merger of the Plan and the Non-Plan classification in the Budget and Accounts. Despite this move, Indian Railways will continue to maintain distinct entity as a departmentally run commercial undertaking as at present. Unified budget will bring Railways to centre stage & present a holistic picture of financial position of government. With the merger of the rail and general Budget, and the move to advance the date of presenting the Budget to February 1, there will be no need of separate Appropriation Bills as well as Vote on Account, as is the current practice. Here are some of the facts that why it was done:
1) The move was aimed at getting all the legislative approvals for the annual spending and tax proposals before the beginning of the new financial year on April 1. Accordingly, the beginning of budget preparation will be advanced to early October. The government is likely to convene the Budget Session of Parliament before 25 January 2017, a month ahead of the current practice. The pre-Budget Economic Survey will also be advanced.
2) Once the rail and general Budget are merged and the date of presentation is advanced, there will be no requirement of separate Appropriation Bills as well as Vote on Account, as is the current practice.
3) The case for abolishing a separate Budget for the Railways has been argued many times earlier. “Like a defence budget or a civil aviation ministry budget, the railway budget does not require a speech to be made, only a set of accounts to be presented to parliament once a year, since the undertaking is owned by the people of India,” said a report.
4) The most important thing is that after the merger, the Railways would not have to pay dividend to the central government and its capital at charge would stand to be wiped off. The Railways used to pay up to Rs 10,000 crore as dividend to the government. The Railway Convention Committee, which reviews the rate of dividend payable by the railways to the government, will be disbanded. Currently, the panel also suggests the level of appropriation to various funds of the railways such as depreciation reserve funds, development fund and pension fund.
5) The Cabinet also approved removal of distinction between Plan and Non-Plan expenditure as the present classification resulted in excessive focus on former with almost equivalent neglect to items such as maintenance which are classified as non-Plan.