Govt merges rail, general budgets

NEW DELHI: The government on Wednesday approved the merger of the rail and general budgets from next year, ending a 92-year-old practice of a separate budget for

NEW DELHI: The government on Wednesday approved the merger of the rail and general budgets from next year, ending a 92-year-old practice of a separate budget for the country’s largest transporter.

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The common budget could be announced in the first week of February as the government also “approved in-principle” advancing the budget schedule.

While the merger will lessen the burden on the cash-strapped Indian railways, an advance budget—in tandem with the targeted roll-out of the goods and services tax (GST) from April 1—will give the states and the Centre early access to funds for construction activities in summer.

Experts said an early budget could give the government additional revenue between Rs 80,000 crore to Rs 1 lakh crore annually as any increase in indirect taxes will come into effect from April 1 instead of the two-three months’ delay at present. It will also help people do better tax planning.

“While we are in favour of advancing the budget date and finishing the entire financial business before March 31, the actual dates (for budget presentation) will be decided after consultations and depending on calendar of the state elections,” Union finance minister Jaitley said after a cabinet meeting.

Five states, including Uttar Pradesh and Punjab, are scheduled to go to the polls early next year.

Jaitley said the cabinet did not discuss the dates of the winter or budget sessions of Parliament.

The previous NDA government led by Atal Bihari Vajpayee had changed another British-era practice in 2001, advancing the time of presenting the budget to 11am from 5pm.

The union cabinet also decided to do away with the demarcation of planned and non-planned expenses to keep the government accounts simpler and more transparent. A common budget will allow a seamless national transportation policy, insulating the railways from political pressures. The idea was first floated by Niti Aayog member Bibek Debroy.

The railways will, however, continue to enjoy its functional autonomy, railway minister Suresh Prabhu said. The Indian railways ferries around 23 million people daily, equivalent to the combined population of Australia and New Zealand, on its network of tracks running up to more than 64,000 km.

Railway unions which have been seeking government help to bail out the PSU running at losses, welcomed the move.

“The railways will benefit if finance ministry handles its burden of subsidies and pensions and waives off the annual dividend,” Shiva Gopal Mishra, general secretary of All India Railwaymen’s Federation, said.

KL Thapar of the Asian Institute of Transport Development said the merger would end the trend of “populism” in rail budget speeches and save precious time of parliament being lost in needless discussions.