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Highlights of budget-related decisions of India's Cabinet

By Ians English

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:

Highlights of budget-related decisions

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.


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