national business
some sanity has come to budget making in recent years with
government moving towards three or four tax rates. Some
stability on direct taxes has now been achieved and with the
rollout of Goods and Services Tax, there would be some stability
in indirect tax rates as well.
The 92 year old tradition of separate Rail Budget is certainly
a step in the right direction as it has deglamorised the railway
portfolio and discourage the leveraging of the Rail Budget for
handing over largesse to vote banks. Every year discussion on
Rail Budget is one of the longest in parliament as majority of
members and parties want to speak on it. The debate is invariably
hackneyed with every member demanding more trains, more
railway lines and more stations in his or her constituency
unmindful of economic viability and technical feasibility. This is
one of the reasons for several crores worth of projects have not
seen the light of the day for decades. In fact the Rs 1.5-2 lakh
crore of rail projects are pending and foundation stones laid for
these projects have remained buried for decades.
Railway Minister Suresh Prabhu is justified in saying that this
is the biggest reforms done till date in the sector. The financial
autonomy will remain with the railways. The existing financial
arrangements will continue and all revenue expenditure,
working expenses, pay and allowance and pension will continue
to be met by revenue receipts of the railways. Some experts
and former finance ministers and railway ministers argue that
though on paper financial autonomy will not be lost, experience
show that it will be as finance minister over a period of time will
have more say on railway allocation than the railway minister as
was the case with gross budgetary support to erstwhile planning
commission. The friction is bound to occur, they argue.
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The Dayafter November 16-30, 2016
But the immediate benefit is that Railways will no longer have
to pay dividends hereafter. The railways pay nearly Rs 10,000
crore as dividend annually and this amount can now be put to use
for capital expenditure of railways. It will also certainly reduce
paperwork and do away with separate passage of appropriation
bill for railways. Railways can now adopt rational approach to
unviable projects.
Along with this merger, the cabinet decided to remove
the distinction between Plan and non-Plan expenditure, a
commendable initiative to simplify and streamline decisionmaking within the government. Year after year, nearly 20 t0 30
percent of plan expenditure remain unutilized due to various
reasons including some political making a mockery of this
distinction. The idea of merging these two heads of expenditure
in the government was first mooted by Prime Minister Economic
Advisory Council Chairman C Rangarajan some years back. It is a
positive development as it would help spending money in a more
useful and integrated manner. What is the point in continuing
with the farce of making huge allocation for plan expenditure
when they are not actually spent? Instead the money could be
put to better use by spending in areas in which it ought to be.
Another important change brought about is the cabinet
clearance to advance the presentation of the Union budget
to February one, instead of last day of the month. This is a
significant development as this would help in ensuring that the
entire budget exercise, which is now a three stage passage in
parliament, is completed before the end of the financial year.
Usually the general budget is presented on February 28 or 29 if
it is a leap year and entire budget exercise have to be completed
within 75 days of budget presentation. This means the budget