GS Mains Model Question & Answer: The General and Railway budgets have been amalgamated with the functional autonomy of the rail budget will continue to be maintained. Comment.


GS Mains Model Question & Answer: The General and Railway budgets have been amalgamated with the functional autonomy of the rail budget will continue to be maintained. Comment.


Q. The General and Railway budgets have been amalgamated with the functional autonomy of the rail budget will continue to be maintained. Comment. (12.5 Marks)

(General Studies Mains Paper III- Economy: Infrastructure)

Model Answer :

With the ambition of putting an end to the populism that had come to be associated with it in the last few decades, the Union Cabinet has decided to bring the curtains down on the 92-year-old tradition of presenting a separate Rail Budget. It has been decided to merge the Rail Budget and the General Budget.

The decision, taken on the recommendation of a NITI Aayog committee headed by its member Bibek Debroy, reflects the decrease over time in the relative size of the Rail Budget compared to some of the other components in the General Budget, such as defence and roads & highways, reducing it to a mere “ritual”.

The scrapping of the rail budget would lead to presentation of a single Appropriation Bill, including the estimates of Ministry of Railways, thereby saving precious time of Parliament by not having to hold separate consideration and passing of two Appropriation Bills. While the railway minister will no longer present the budget, the process for preparing the budget will remain the same. Both budgets will be presented by the finance minister in Parliament.

The Cabinet also approved removal of distinction between Plan and Non-Plan expenditure as the present classification resulted in excessive focus on former with almost equivalent neglect to items such as maintenance which are classified as non-Plan.

The Cabinet felt it is the total expenditure, irrespective of Plan or Non-Plan, that generates value for the public. Plan expenditure was for the first time presented separately in the budget for 1959-60. The union cabinet also approved finance ministry's proposal to advance the general budget's presentation by a month from the end of February.

The Cabinet also gave its nod to advancing presentation of the annual Budget by a month and removed classifications for expenditure to make the exercise simpler.

To facilitate this, the Budget Session of parliament will be called sometime before January 25, a month ahead of the current practice. Accordingly, the beginning of budget preparation will be advanced to early October and GDP estimates made available on January 7 instead of February 7 now.

Till now Budget was presented on the last day of February and it is not until mid-May that the Parliament approves it in two parts. And with the monsoon arriving in June, most of the schemes and spendings by states do not take off until October, leaving just half a year for their implementation.

Early presentation of Budget would mean that the entire exercise is over by March 31, and expenditure as well as tax proposals come into effect right from the beginning of new fiscal, thereby ensuring better implementation.

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