Of the three major changes to the Union Budget cleared by the Cabinet on Wednesday — advancement of the date of presentation by a month, dropping the classification of expenditure as Plan and Non-Plan and doing away with the Railway Budget — the last one has generated a lot of comment, and understandably so. After all, a nine-decade-old convention is being given the go by. The fear is that the move is an exercise in obfuscation to cover up the precarious financial situation of the Railways especially after the implementation of the Seventh Pay Commission award. There is also an opinion that the decision will rob the Railways of its autonomy and that transparency will become the casualty. These are unfounded fears born out of nostalgia for age-old practices and an attachment to convention. It is no secret that railway finances are in a perilous condition but this is not something that became known yesterday for the Centre to cover up by subsuming the rail budget into the general one.
The Railways is an arm of the Government and depends on significant budgetary support to bridge its finances. It is neither in the Centre’s interest nor is it possible for it to cover up the bad finances of the Railways simply because the numbers will show up in the overall budget arithmetic anyway. What the move will certainly do, though, is put an end to the annual drama surrounding the event — assorted MPs, ministers and ruling party heavyweights trying to curry favour with the railway minister for new trains, lines or projects in their respective constituencies. That said, the Centre should allay fears over obfuscation by giving adequate space in the finance minister’s budget speech to the performance of the Railways and set out the numbers in a separate annexure to the General Budget. The Centre should also quickly set up a regulator who will oversee tariff adjustments, which can now happen through the year.
The dropping of the distinction between Plan and Non-Plan expenditure was inevitable after the decision to move away from Five-Year Plans. The move to classify expenditure as capital and revenue is a much-needed reform measure that has been under consideration even by earlier governments. The advancement of the Budget presentation is an interesting decision and the effects of the move need to be carefully watched. The Budget will now stand a lot more on estimates than actual numbers which means that projections need to be as close to accurate as possible. Parliament will also have a shorter window to discuss and digest the budget numbers and proposals and it remains to be seen if critical assessment becomes a casualty in the endeavour to spread government spending evenly across the fiscal year.