New Delhi, Sep 21, 2016: The Union Cabinet officially scrapped the British-era practice, since 1924, of putting up a separate Railway Budget and merged it with General Budget on Wednesday.
The Cabinet also cleared finance ministry’s proposals to reform the entire budgetary process, including advancing the date of budget presentation and dropping the plan and non-plan distinction.
After the Cabinet meeting, Finance Minister Arun Jaitley said that “From coming year the railway and the general budget will be amalgamated. There will be only one budget. And secondly, distinction between plan and non-plan expenditure will be ended from next year.”
However, The Date of Budget would be decided upon later on.
Non-plan expenditure is what the government spends on the so-called non-productive areas, such as salaries, subsidies, loans and interest, while plan expenditure pertains to the money to be set aside for productive purposes, like the various projects of ministries.
Finance ministry officials said after the abolition of the Planning Commission, the relevance of plan and non-plan expenditure is lost — and a better indicator of productive and general expenditure will be a distinction under the heads of revenue and capital.
Now, the Railways will be like any other government department that receives budgetary support but comes under the finance ministry’s oversight as far as spending and earnings are concerned.
Once the overall funds are allocated, railways will then segregate them for various purposes with sources indicating that the model will be similar to the one for the postal department.