Union cabinet approves merger of rail budget with general budget

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New Delhi: The Union Cabinet has approved the proposals of Ministry of Finance on certain landmark budgetary reforms relating to the merger of Railway budget with the General budget,  advancement of the date of Budget presentation from the last day of February to the 1st of February, and  the merger of the Plan and the Non-Plan classification in the Budget and Accounts. All these changes will be put into effect simultaneously from the Budget 2017-18.

The arrangements for merger of Railway budget with the General budget have been approved by the Cabinet with the following administrative and financial arrangements: the Railways will continue to maintain its distinct entity as a departmentally run commercial undertaking as at present, it will retain its functional autonomy and delegation of financial powers etc as per the existing guidelines,  the existing financial arrangements will continue wherein Railways will meet all its revenue expenditure including ordinary working expenses, pay and allowances and pensions etc. from its revenue receipts, Capital at charge of the Railways estimated at Rs.2.27 lakh crore on which annual dividend is paid by the Railways will be wiped off. Consequently, there will be no dividend liability for Railways from 2017-18 and Ministry of Railways will get Gross Budgetary support, according to a PIB release. This will also save Railways from the liability of payment of approximately Rs.9,700 crore annual dividend to the Government of India, the PIB release said.

The presentation of separate Railway budget started in 1924 and has continued after independence as a convention rather than under Constitutional provisions. Consequent to the merger, the appropriations for Railways will form part of the main Appropriation Bill.

The   Cabinet   has   also   approved, in principle, another   reform   relating   to   budgetary   process,   for advancement of the date of Budget presentation from the last day of February to a suitable date.  The exact date of presentation of Budget for 2017-18 would be decided keeping in view the date of assembly elections to be held in states, according to PIB release.The advancement of budget presentation by a month and completion of Budget related legislative business before March 31 would pave the way for early completion of budget cycle and enable Ministries and Departments to ensure better planning and execution of schemes from the beginning of the financial year.