The Union Cabinet has approved the merger of railway and general budget but said that distinct identity and the functional autonomy of the railways will be maintained. The cabinet has also decided to advance the date of presentation of the annual accounts and decided to do away with the Plan/ Non-Plan expenditure classification in Budget 2017-18, replacing it with 'capital and receipt'. Advancement of budget will help complete related legislative business before March 31 and will enable better planning and execution of schemes from the beginning of a fiscal year, while doing away with the Plan and Non-Plan expenditure classification will provide corporate-style budgetary framework having a focus on revenues and capital expenditure.
The committee headed by NITI Aayog member Bibek Debroy, set up to finalise the modalities for the merger of rail budget with the general Budget had observed that presenting a separate railway budget is only a ritual as its size has become very small compared to the general budget. It had suggested that rail budget should be a part of government's overall fiscal discipline and the developmental approach of the Budget. Railway Minister Suresh Prabhu said that it was decided for merger of the rail budget with general budget but distinct identity of the railways will be maintained. Following the merger of Budget, the Railways would not have to pay dividend to the central government though it would still get gross budgetary support from the exchequer. In the financial year 2016-17, the railways had to pay dividend of Rs 9,731 crore, of which subsidy was Rs 4,301 crore, as a result the national transporter had to pay Rs 5,430 crore to the exchequer.
As far as the salary and pension bill of railway employees is concerned, it will remain the responsibility of the national transporter as there will be no change in the existing practice. At present, the railways has to bear an additional burden of about Rs 40,000 crore on account of implementation of the 7th Pay Commission awards, besides, an annual outgo of Rs 33,000 crore on subsidies for passenger service.
The merger is also expected to reduce the procedural requirements and instead bring into focus, the aspects of delivery and good governance. Consequent to the merger, the appropriations for railways will form part of the main Appropriation Bill. This will mark an end to the 92-year old practice of presenting a separate railway budget as was recommended by the Acworth Committee in 1921. Based upon the recommendations, the finances of railways were separated in 1924.
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