The Narendra Modi government ended a 92-year-old British era practice by merging the railway budget with the general budget.The government also in-principle decided to advance the presentation of the general budget from the last day of February to the first week of the month.
While finance minister Arun Jaitley told reporters that the budget date will be decided once the time table for assembly elections in Uttar Pradesh, Punjab and Gujarat was known, sources said that February 1 was the tentative date and the Economic Survey will be tabled in Parliament a day earlier.
By advancing the budget, the government is looking to ensure that Parliament cleared the Finance and Appropriation Bills before the end of the fiscal on March 31, enabling ministries to kick off spending from April. It will also help companies and individuals to plan their taxes better. Currently , the budget exercise, which involves parliamentary clearance and notification by the President, is completed around the middle of May and government departments begin spending from June. Apart from the rates, other service tax changes also kick in from the third month of the financial year.
Though a separate railway budget has been junked, “functional autonomy of the Railways will be maintained. There will also be a separate discussion on railway expenditure each year in Parliament“, Jaitley said. A separate railway budget followed the recommendations of the Actworth Committee in 1924, which had felt that development of the railways was hostage to vagaries of the general budget. A panel headed by Niti Aayog member Bibek Debroy had recommended scrapping the practice of a separate railway budget.
The decision came with a relief for the Railways, which will not have to shell out an annual dividend of around Rs.10,000 crore, leaving it with more resources to spend on adding capacity and modernising its creaky infrastructure.
Officials said that the move will not impact government finances in any way with the net impact of dividend estimated at Rs 4,200 crore.
The NDA governments have reworked the way the budget has been presented. In 1999, the Atal Bihari Vajpayee regime had moved the presentation of the budget to 11 am instead of the British era practice of 5 pm.