Rail and general Budget on same track after 92 years

The government finally bit the bullet on Wednesday by deciding to do away with a separate railway budget and merging it with the general Budget. The decision to end the 92-year-old tradition was taken by the Union Cabinet on Wednesday, where it was also agreed in-principle to advance the date of the Budget’s presentation in Parliament from the usual February end.

The actual date for presentation of the general Budget for 2017-18 will be decided by the government after taking into account the ensuing Assembly elections, finance minister Arun Jaitley said while briefing the media about the Cabinet’s decisions.

“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,” Mr Jaitley said.

The Cabinet has also decided to do away with the plan/non-plan expenditure classification in Budget 2017-18 and replace with “capital and receipt”.

Rail minister Suresh Prabhu, who was present at the media briefing, said that the merger of rail and general Budget will not impact the functional autonomy of the railways but, instead, help in enhancing capital expenditure.

“One single Budget will mean railway and general Budget will work in harmony,” Mr Prabhu said, adding Railways will not have to pay dividend to the government.

The end of a separate Budget will be a relief for the Railways, since its revenue deficit and capital expenditure will now get transferred to the finance ministry.

“All proposals regarding the Railway budget will be part of general Budget, which will have a separate discussion on railway expenditure,” the finance minister said.

Asked who will decide on passenger fare and freight rates, Mr Jaitley said, “These decisions will continue to be taken by the Railways.”

A common Budget will allow a seamless national transportation policy, insulating the railways from political pressures.

Mr Prabhu had played an active role in seeking the railway budget’s merger with the general Budget. Niti Aayog too had mooted the proposal to the PMO.

The government, Mr Jaitley said, was in favour of advancing the budgetary exercise so that it could be completed before March 31 and expenditure on public-funded schemes could begin from April 1.

“While we in-principle are 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 calendar of the state elections,” he said.

The crucial Uttar Pradesh Assembly polls are scheduled to be held in March 2017.

Mr Jaitley added that the Centre is keeping itself in a “state of readiness” to advance the Budget presentation.

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 and it was usually presented two days before the Union Budget.

The previous NDA government led by Atal Bihari Vajpayee had changed another British-era practice in 2001, advancing the time of presenting the budget to 11am from 5pm.

Economic affairs secretary Shaktikanta Das said the Central Statistical Organisation (CSO) will provide provisional advance estimates of national income or GDP by January 7 so that the data can be incorporated in preparation of Budget.

The provisional advance estimates, he hoped, would be in line with the one normally released by February 7.

Mr Das said the government will issue Budget circular in a day or two.

Mr Jaitley said the report of a committee headed by Niti Aayog member Bibek Debroy had observed that presenting a separate railway budget is only a ritual as its size has become very small compared to the general Budget. It had suggested that rail budget be a part of the government’s overall fiscal discipline and the developmental approach of the Budget.

The finance minister said the government will continue to maintain the distinct identity of the railways and its functional autonomy.