 "Lack of data a major hurdle in advancing Budget")
The government is seriously looking at the proposals of advancing the date of Budget presentation to early January and merging the Union Budget with the Rail Budget.
While policymakers are confident that both can be done, a senior official conceded that the lack of data for Budget preparations to begin will be a distinct disadvantage.
The official also said that if the Rail Budget and Union Budget were merged, Finance Minister Arun Jaitley might not read out the details on new railway lines and trains, as is the practice now. These could be laid out in the annexure of the Budget speech, instead.
The government is planning the most comprehensive overhaul of the Budget in recent times. Apart from the two proposals mentioned above, the finance ministry is set to remove Plan and non-Plan distinction for expenditure and moving to output-based budgeting with three-year rolling targets, in the upcoming 2017-18 Budget.
The idea behind advancing the Budget date is to ensure that 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. The proposal for a change in the Budget presentation date was first mooted by some of the government’s most senior bureaucrats as part of the Transforming India initiative in January.
“We are examining the proposals of advancing the Budget date to January and merging the Union Budget with the rail Budget,” said the official.
One big disadvantage of advancing the Budget date is the lack of comprehensive revenue and expenditure data. Currently, work on the Budget begins in earnest by December. By the time the Budget is finalised in mid-February, data on revenue collections and expenditure trends is available for the first nine months of the financial year — April-December. Based on which, projections for the full year can be made.
To read the Budget in January, the Centre will have to start preparing it by early October. To go with less than six months of data and make projections for the full year and the next year, based on such an incomplete picture, would be difficult. “Lack of data is a big challenge. We need to see how to work around that,” the person said.
Advancing the Budget dates would be fraught with more practical difficulties. Effective Budget planning depends on the monsoon forecasts for the coming year, making the advancing the exercise more challenging. Additionally, the dates for the Budget session of Parliament will have to be changed.
However, there are also a lot of positives. 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 late April or early May. If the Budget is read in January and passed by February-March, it would enable the government to do away with a vote-on-account for the first three months of a financial year
Retired and serving officials said the biggest plus would be that the Finance Bill, incorporating the Budget proposals, could be passed by February or March. So, government departments, agencies and state-owned companies would know their allocations from April 1, when the financial year begins.
It would also help the private sector to anticipate government procurement trends and evolve their business plans. And, civil society could deliberate on and give feedback in time for the parliamentary discussions.
On merging the rail Budget, the official said, "If it happens, the finance minister will not read the proposal of laying new lines or new trains (in his Budget speech in the Lok Sabha)," the official said, adding that it would be put in the Budget as an annexure.
Minister of Railways Suresh Prabhu had favoured scrapping the tradition of having a separate Railway Budget. He wanted it to be merged with the General Budget, like it happens in all other ministries, including the crucial defence.
The finance ministry has constituted a five-member committee to work out the modalities for the merger. The committee has been asked to submit its report by August 31.
A GOOD IDEA OR A BAD ONE?
Upside
-
Finance Bill, incorporating the Budget proposals, could be passed by February or March
-
Govt departments, agencies and state-owned firms would know their allocations right from April 1
-
Lack of comprehensive revenue and expenditure data
-
Planning depends on the monsoon forecasts for the coming year, making the whole exercise more difficult
- Shifting of the dates of winter and Budget sessions of Parliament will be a challenge
