The Union Cabinet on Wednesday approved the merger of the Railway Budget with the General Budget, signalling the end of a 92-year tradition.

As part of a revamp of the Central government’s Budgetary process, it also cleared proposals to advance the presentation of the General Budget and scrap the distinction between the Plan and Non-Plan Expenditures.

“All these changes will come into effect simultaneously from Budget 2017-18.There will be a single General Budget,” said Finance Minister Arun Jaitley after the Cabinet meeting.

Till now, the Union Budget was presented on the last working day of February. A separate Railway Budget was started by the British in 1924 as most government spending was concentrated in the sector.

This is the first time in 16 years that the government has decided to review the Budgetary process.

Interestingly, it was during the earlier NDA regime in 2001, that the government had dispensed with another colonial legacy and advanced the Budget presentation timing from 5.30 p.m. to 11 a.m.

Jaitley announced that while the Cabinet had taken an in-principle decision to advance the Budgetary process, the exact dates for presentation of the Budget will be decided based on the calendar for State Assembly elections.

Official sources said the Budget is likely to be presented in early February next year, which could be further advanced to end January later.

The move will help even the flow of government expenditure throughout the fiscal year by ensuring that the Budget is passed by March 31.

To help the government in its policy planning for the Budget, the Central Statistics Office will provide provisional Advance Estimates of national income or GDP by January 7, although it will still be officially released in February. “We expect that the provisional advance estimates would be in line with the one normally released by February 7,” he said.

Regarding the merger of the Railway and General Budget, Jaitley said the distinct identity of the Railways and its functional autonomy will continue. “The government will take an initiative to ensure there is a separate distinction of railway expenditure in Parliament every year to ensure detailed Parliament scrutiny,” he said.

A proposal to merge Railway Budget has come from various committees, Jaitley said, adding that recently a NITI Aayog panel headed by Bibek Debroy had also said “that the size of the Railway Budget is very small and to present it separately is not required.” The capital at charge of Railways, which is estimated at ₹2.27 lakh crore, will be wiped out and there will be no dividend liability, which is estimated at ₹9,700 crore. Railway Minister Suresh Prabhu said more modalities for the merger will be discussed but added that financial autonomy of the Railway officers will continue. He also expressed hope that the merger will help the Railways increase its capital expenditure.

From 2017-18, the government will also move to an expenditure classification of capital and revenue and do away with the classification of Plan and Non-Plan expenditures.

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