Union Budget 2018 is getting a makeover. Breaking the decades-old tradition, it will be presented on February 1 instead of the last working day of February. By advancing the date, the government intends to complete the exercise, including the passing of The Finance Bill and Appropriation Bill in Parliament before April, the onset of a new financial year. Currently, though the Budget is presented in February, it’s only in May that the Finance Bill, involving tax changes and expenditure details, is passed. Saving this time could lead to better execution.
For the first time in nearly a century, Budget 2018 will include the Railway Budget, which until now was presented separately. Doing so will save the national rail network Rs 10,000 crore every year (Rs 5,000 crore excluding subsidies). How? A single Appropriation Bill entitles the finance ministry to prepare legislative work including statement of accounts. The Railways, though will continue as a department-run, commercial undertaking, it will be exempted from paying dividends to the government and hence the savings. Also, the move vests power with the finance ministry to revise fares depending on the financial condition and not political constraints. Third and most important, the upcoming Budget will cease to have the age-old plan and non-plan classification.
Originally, plan expenditure included capital expenses leading to asset creation, while non-plan comprised revenue expenditure like salaries, interest payments etc. But over time, the distinction lost clarity. This choked implementation of schemes. By focusing on capital and revenue expenditure, the budget will move a step closer to performance-linked, outcome-based budget, provide control over public debt, and step up gas on capital formation. But for this to happen, states’ support — by advancing their budget presentations and timely inputs — is vital. For, any inconsistency will lead to chaos.