Cabinet call on Budget overhaul next week

The Union Cabinet, headed by prime minister Narendra Modi, is likely to take a final call next week on advancing the date of Budget presentation and the merger of Union and railways Budgets.

A cabinet note detailing above proposals as well as elimination of plan and non-plan classifications of expenditure and shifting to outcome-based budgeting has been circulated for inter-ministerial consultations and is likely to be placed before the Cabinet as early as next week, government sources said.

The Modi government is likely to present the Union Budget in the last week of January or the first week of February. This will ensure the Finance Bill is passed before the start of the financial year, on April 1, so that all central government departments get their full allocations to work with right from the first day.

In the existing system, the Lok Sabha passes a vote-on-account for the April-June quarter, under which departments are provided a sixth of their total allocation for the year. This is done by March. The Finance Bill is not passed before May. Advancing the dates would enable the government to do away with the vote-on-account.

The railways minister Suresh Prabhu was the one who initiated the process of scrapping the railways Budget. "Except India, no other country in the world has a railways Budget. We want to do away with this colonial tradition," Prabhu told Business Standard in August.

According to sources within the railway ministry, it will not have to pay the annual dividend it has to pay for gross budgetary support from the government. "We will be able to save Rs 10,000 crore, while the net savings will be Rs 4,000-5,000 crore," said a ministry official.