The NITI Aayog committee in its report had said that a separate Railway Budget was just an annual ritual that should be done away with as the size of the Railway Budget has shrunken when compared to the overall general budget. It said that presenting a separate Railway Budget was not required. Notably, India was the only country in the world where the Railway Budget was presented separately.
Next year on 1 February , Arun Jaitley became the first Finance Minister to present a combined railway and general budget. Along with this, Arun Jaitley also changed the Budget presentation date. Now, the Budget is presented on February 1 and the Economic Survey was also advanced to the first day of the Budget Session, which is January The indirect taxes are also tinkered with. Of course some sanity has come to budget making in recent years with government moving towards three or four tax rates.
Some stability on direct taxes has now been achieved and with the rollout of Goods and Services Tax, there would be some stability in indirect tax rates as well.
The 92 year old tradition of separate Rail Budget is certainly a step in the right direction as it has deglamorised the railway portfolio and discourage the leveraging of the Rail Budget for handing over largesse to vote banks. Every year there is demand for more trains, more railway lines and more stations, unmindful of economic viability and technical feasibility.
This is one of the reasons for several crores worth of projects have not seen the light of the day for decades.
In fact the Rs 1. Railway Minister Suresh Prabhu is justified in saying that this is the biggest reforms done till date in the sector.
The financial autonomy will remain with the railways. The existing financial arrangements will continue and all revenue expenditure, working expenses, pay and allowance and pension will continue to be met by revenue receipts of the railways. The immediate benefit is that Railways will no longer have to pay dividends hereafter. The railways pay nearly Rs 10, crore as dividend annually and this amount can now be put to use for capital expenditure of railways.
It will also certainly reduce paperwork and do away with separate passage of appropriation bill for railways. Railways can now adopt rational approach to unviable projects. Along with this merger, the cabinet decided to remove the distinction between Plan and non-Plan expenditure, a commendable initiative to simplify and streamline decision-making within the government. Year after year, nearly 20 to 30 per cent of plan expenditure remain unutilized due to various reasons including some political making a mockery of this distinction.
The idea of merging these two heads of expenditure in the government was first mooted by Prime Minister Economic Advisory Council Chairman C Rangarajan some years back. It is a positive development as it would help spending money in a more useful and integrated manner. What is the point in continuing with the farce of making huge allocation for plan expenditure when they are not actually spent.
Instead the money could be put to better use by spending in areas in which it ought to be. Another important change brought about is in-principle clearance to advance the presentation of the Union budget to early part of February, perhaps first of the month instead of last day of the month. This is a significant development as this would help in ensuring that the entire budget exercise, which is a three stage passage in parliament, is completed before the end of the financial year.
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