Finance Minister Arun Jaitley may do away with the age-old practice of reading out lengthy proposals on new railway lines and trains once the 92-year-old colonial practice of a separate Railway budget is scrapped and merged with the general Budget.
Instead, these will be put in the form of an annexure in the Budget. As part of a larger exercise of Budget overhaul, the government is looking at advancing the dates of presentation by a month to January-end to ensure the whole process is completed before the beginning of the next financial year.
“Advancing the date of Budget presentation to January-end is a suggestion. There are some data-related issues. We are seeing (it),” a top Finance Ministry official said. The official added that advancing the general Budget presentation by a month to January-end will streamline expenditure.
“Currently, as the full Budget gets passed by May, most of the expenditures currently happen in the third or fourth quarter (of the financial year). If the Budget happens in January, expenditure can be streamlined,” he said.
While the Constitution does not mandate any specific date for presentation of the Budget, it is usually presented on the last working day of February and the two-stage process of parliamentary approval takes it to mid-May. On merger of the railway budget with the general one, he said a decision is yet to be taken. “Even if it happens, the finance minister will not read the proposal of laying new lines or new trains (in his Budget speech in the Lok Sabha),” the official said, adding that it would be put in the Budget as annexure.
Railway Minister Suresh Prabhu has favoured scrapping the tradition of having a separate railway budget. He wants it to be merged with the general Budget like it happens in all other ministries, including the all-crucial Defence.
The Finance Ministry has also constituted a 5-member committee to work out the modalities for the merger. The committee has been asked to submit its report by August 31. Another official said the Finance Ministry is considering advancing Budget presentation by a month to January-end. “But that doesn’t signal changing financial year soon,” he added. Having ruled by the British for around 150 years, India followed the accounting period of April to March, in line with the Gregorian calendar of accounting.
The government has constituted a committee headed by former chief economic advisor Shankar Acharya to study the feasibility of adopting a new financial year. The panel will submit its report by December 31, 2016.
Previously, the L K Jha Committee appointed in May 1984 to look into the matter had recommended switching over to the calendar year, but the government did not accept the recommendation, saying it would cause large-scale problems as most Indian companies follow the April-March cycle. As the financial year begins on April 1, the government in March takes Parliament approval for Vote-on-Account for a sum of money sufficient to meet expenditure on various items for the next 2-3 months till the full Budget is passed.
The Demands and Appropriation Bill entailing full-year expenditure as well as tax changes is then passed in April/May. The official said the Finance Ministry is of the view that if the process is initiated earlier, there will be no need for getting a Vote-on-Account and a full Budget can be approved in 1-stage process before March 31. The proposal before the government is to present the Budget in last week of January, preferably on January 31, and wrap up the entire process by March 31.
Jaitley holds inter-ministerial meet on banning sugar futures
Finance Minister Arun Jaitley on Monday held an inter-ministerial consultation on imposing ban on sugar futures trading in an effort to curb speculation and check price rise of the sweetener during festival season. Minister of State for Food C L Chaudhary, Secretaries from Food, Consumer Affairs, Agriculture and Finance Ministries were present in the meeting.
The meeting comes in the backdrop of the Food and Consumer Affairs Ministry recommending the regulator Sebi to ban sugar futures trade to check prices. Sugar prices in the retail markets have risen in last few weeks and are ruling at Rs 42 per kg in the national capital.
“We discussed about banning sugar futures trading in the meeting called by the FM. It was an initial discussion and nothing was decided,” Chaudhary said after the meeting. Food Secretary Vrinda Sarup echoed the same and said, “nothing has been finalised on banning sugar futures.” Sugar is largely traded on leading agri-commodity bourse National Commodity and Derivatives Exchange (NCDEX).
The exchange has already raised the margin amount to be deposited by both sellers and buyers on its platform. To check prices, the government recently imposed an export duty of 20 per cent on sugar as part of its efforts to curb outbound shipments and boost domestic supply.