New Delhi, Sept 21: In a major financial sector reform, India on Wednesday decided to do away with a 92-year-old legacy of separate general and railway budgets by unifying them, a tradition that has been continuing since British colonial times.
The following are the highlights and implications of the three budget-related decisions taken by the Union Cabinet at a meeting presided over by Prime Minister Narendra Modi on Wednesday:
Merger of Railway Budget with the General Budget:- Distinct identity of Indian Railways will continue as a departmentally-run commercial unit
- Functional autonomy and financial powers will be retained by the Railways
- Railways will continue to meet their revenue expenditure from revenue receipts
- Railways will no longer pay dividend to the government totalling Rs 9,700 crore
- The merged budget will help present a holistic picture of government's financial position
- It will cut legislative and procedural requirements.Advancement of the Budget presentation:
- Advancement of budget will help complete related legislative business before March 31
- It will enable better planning and execution of schemes from the beginning of a fiscal year
- This will preclude the need for vote on account by the Lok Sabha
- It will enable the implementation of legislative changes in tax laws from the beginning of a fiscal
Merger of plan and non-plan classification of budget:
- Earmarking of funds for the Sscheudled Castes, the Scheduled Tribes and related subjects will continue
- Plan and non-plan expenditure distinction had led to fragmented view of resource allocation to various schemes
- It was becoming increasingly difficult to ascertain the cost of delivering a service and to link outlays with outcomes.
- The focus on plan expenditure had led to a neglect of expenditures on maintenance of assets and for providing essential social services.- The merger is expected to provide corporate-style budgetary framework having a focus on revenues and capital expenditure.