Union budget in Jan, no separate railway budget

In a major financial overhaul, the Union Cabinet on Wednesday advanced Parliament's budget session by a month. The budget will be presented in January so it can be passed before the next financial year begins on April 1, instead of the current practice in which a vote-on-account is used for four months until the budget is cleared in May-June.

It also put an end to the 92year old practice of separate presentation of the railway budget which will henceforth stand merged into the Union Budget, Finance Minister Arun Jaitley, seated alongside Railway Minister Suresh Prabhu, told a press conference here.

Yet another major decision of the Cabinet is to put an end to the distinction between the plan and non-plan expenditure.

Plan expenditure is for creation of the assets, first presented separately in the budget for 1959-60, while the non-plan expenditure refers to items such as salaries and maintenance costs.

The Cabinet felt the distinction is meaningless for the people who are just interested in the government's total spending.

The Union Cabinet, headed by Prime Minister Narendra Modi, cleared a proposal for the budget to be presented by January 25 every year instead of the last working day of February.

The government hopes that if the budget is presented by January 25, Parliament will have enough time to debate the proposals and clear it so that tax and spending proposals come into effect right from April 1, the day the new financial year starts. To facilitate the new drill, the budget Session of Parliament will be called sometime before January 25, a month ahead of the current practice. The budget preparation will be advanced to early October and GDP estimates made available on January 7 instead of February 7 now. So far, the Budget has been presented on the last day of February and it is not until mid-May that Parliament approves it in two parts. With the monsoon arriving in June, most of the schemes and spending by states cannot take off until the rains end in October, leaving just half a year for their implementation. In view of the upcoming Assembly elections, Jaitley said the exact date on which he would present the budget to Parliament will be decided keeping the calendar of the Assembly elections in mind. He also clarified that notwithstanding the merger of the railway budget with the union budget, the Indian Railways will continue to be a distinct entity as a departmentally-run commercial undertaking as at present. In other decisions, he said the Cabinet extended the stockholding limit on pulses, edible oils and oilseeds by one year till September 30, 2017, ex-post facto pension hike of 20% on an average to freedom fighters, their spouses, parents and daughters, subsidy of Rs 1,250 to BSNL for the rural landline connections, and signing of the tax agreement with Samoa.