‘We will begin the Budget-making process this week’

Advancing the date of the Budget will put an end to the ‘suspense’ over the allocations to various government departments which existed earlier, Finance Secretary Ashok Lavasa, who also holds the charge of Secretary, Department of Expenditure, said. The move will ensure better planning as by March 31, 2017, all Budgetary allocation will be made, he said. In an interview to BusinessLine , Lavasa said the Budgetary exercise will begin this week, while the inter-ministerial consultations will begin in October. He also said the Railways will continue to enjoy independence in all administrative and operational decisions despite the merger of the Railway and General Budgets. Excerpts:

How prepared is the Finance Ministry to meet the deadline of the advanced Budget?

The Cabinet has already given its in-principle approval for advancing the dates of the General Budget. But, there are Assembly Elections in some States in 2017, that have to be accounted for and then decide on the date of Budget presentation.

Till now, the Ministry began the Budget-making exercise in October. The decision to advance the Budget was under discussion for a long time.

So internally, within the Ministry, we were mentally prepared to meet the new targeted date, in case it was advanced. Now that there is clarity, we will begin the process of Budget-making by issuing the Budget circular this week and then there is a formal consultation with all the departments. That should begin in October.

How will it impact government expenditure and revenue?

Advancing the Budget timetable will have two implications.

First, there is clarity at the beginning of the financial year and it will help in better planning. On April 1, departments will know how much funds they have been allocated. Earlier, there was an element of suspense as allocations could be formally conveyed till it was approved by Parliament. The Vote on Account enabled them to carry out day-to-day expenditure, but they couldn’t spend on new schemes.

Further, for many schemes, it could well be that by the time the funds were approved, it would be monsoon and then a couple of months were lost.

So virtually four to five months were gone by the time they could use the funds. Now, the intention is that by March 31, the Budgetary allocation will be clear.Second, the tax proposals will also take effect immediately. That also brings in more clarity and will help in immediately implementing the proposals.

With the advancement what will happen to the two committees’ reports — Fiscal Responsibility and Budget Management Act, Change of the Financial Year — which will be submitted soon? Will you have time to review them?

These are two separate exercises that are going on. Both the committees have specific mandates. As and when they give their reports to the government, we will look into them and then take them forward. The decisions taken today can be implemented without them.

What will be the gains from merging the Railway and General Budget?

The Railways will now be integrated as far as the financial planning of the government is concerned.

Also, the Railways is a part of providing transportation solutions to the country. With the integration of the Budget, it will help everyone in comprehensive multi-modal planning.

The Railway Budget was traditionally a time for announcements on fare and freight changes and commencement of new trains? Will this now continue?

The government has decided that the Railways will continue to have functional autonomy and just like any other administrative ministry, it will be responsible for taking all administrative decisions and on issues affecting its operations.

The independence of the Railways and the commercial nature of their services will continue. This will just be a merger of the accounting statements and presentation of the Budget. The decisions on fare and freight will be a part of the railway functioning. And it is not the case that the Railways can only take operational decisions only at the time of the Budget. It can be done at any time.

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