The Union Cabinet has approved a major fiscal reform by merging the Railway Budget with the General Budget, scrapping the plan and non-plan expenditure category and switching to revenue and capital spending, and advancing the date of presentation of the Budget. In an interview to BTVi , Economic Affairs Secretary Shaktikanta Das says the Finance Ministry is ready to carry out the path-breaking reforms. The functional autonomy of the Railways to take commercial, policy and operational decisions will continue, he said.

Can you tell us how the merger of the Rail and General Budgets will be carried out? Will the various funds of the Railways be consolidated within the Budget? Given the bulging liability of the Railways, including that for pension, to what extent will the Finance Ministry be meeting all of them?

Even now the Railways’ finances are part of the Annual Financial Statement (AFS), which we present to Parliament. Now, Railways has 16-17 demands for grants. Instead, they will have only one demand for grant, which will become a part of the General Budget. The working expenses of the Railways now are borne out of the revenues, the tariffs, the passenger fares and the freight revenues. That will continue as it is.

As far as the borrowings of the Railways are concerned, separately the Railways do not borrow as such. They do not raise loans. Even today, it is a part of the overall government debt. What the Railways gets from the IRFC (Indian Railway Finance Corporation) is not borrowing, it is a leasing arrangement. The assets are temporarily transferred to the IRFC and the annual lease rental is paid by some kind of an annuity payment. That is the revenue expenditure. That practice will continue and it will not interfere with the government debt.

There has been talk about the functional autonomy of the Railways Ministry. Who will decide on the fare — the Finance Ministry or the Railways Ministry?

The functional autonomy and the autonomy of the Railways to take commercial, policy and operational decisions will continue.

What according to you is going to be the actual date for the Budget presentation and what is the level of preparedness for presenting the Budget in the first week of February? Will it happen even before that?

I can’t say when the Budget will be presented. The Finance Minister has already said that the government will decide on the date of the Budget presentation when there is clarity with regard to the elections in various State Assemblies. Now we are in a state of preparedness to present the Budget. Should the government decide to advance the Budget by 3-4 weeks, we are in a state of readiness. We have discussed with other ministries also, and that can be done.

The Committee headed by Shankar Acharya is examining tweaking the financial year. In this particular context, how is it going to pan out?

The Committee has been given a time frame of six months to submit its report. So as and when that Committee’s report is submitted, the government will take a call. As far this year’s Budget is concerned, it will not be impacted by the Committee’s recommendation.

The Finance Ministry is having discussions with the Statistics Department to give the advanced estimates of the GDP as early as possible. The last quarter is the most significant quarter. And if you don’t have the numbers from that particular quarter, how well are you going to base the projections for the next financial year in the Budget?

Expenditure allocations, even now, are prepared on the basis of actual expenditures up to September. That is on the basis of six months’ expenditure. What we get from the CSO (Central Statistical Office) is an advanced estimate of the GDP of the current year, in the first week of February. Now we will get that provisional advanced estimate in the first week of January. Experience show that the difference between the estimates will not be significantly different. Therefore, it is not going to impact the fiscal deficit and the FRBM (Fiscal Responsibility and Budget Management) numbers because that is the purpose for which the advanced estimates are necessary. But hypothetically, if there is a difference, we will know that by the first week of February. If it requires some amount of tweaking, it can always be done because the Parliament would be in session; the Finance Minister would be giving a reply to the general discussion of the Budget.

Is there a proposal for a separate Agriculture Budget?

I am not aware of any such proposal.

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