Last Updated : Sep 21, 2016 04:50 PM IST | Source: CNBC-TV18

Rlys won't have to pay dividend under merged Budget: Fin Secy

Once the circular is issued Budget exercise will kick off, Finance Secretary Ashok Lavasa told CNBC-TV18. Under the contours of the merged Budget, gross budgetary support to Railways Ministry will continue, so will the commercial arrangements of Railways Ministry, he said.

The Cabinet on Wednesday gave approval to merge Railway Budget with Union Budget from next year. It has also in-principle agreed to advance the Budget day, a circular for which will be issued in the next couple of days, according to a Finance Ministry official.

Once the circular is issued, Budget exercise will kick off, Finance Secretary Ashok Lavasa told CNBC-TV18. Under the contours of the merged Budget, gross budgetary support to Railways Ministry will continue, so will the commercial arrangements of Railways Ministry, he said.

Lavasa added that Railways will no longer be required to pay dividend.

Below is the transcript of Ashok Lavasa’s interview to Sapna Das on CNBC-TV18.

Q: Today the decision was taken by the Cabinet, three quick things, advancement of the Budget date, merging of the Rail Budget with the Union Budget and to end distinction between planned and non-planned. Now in terms of the advancement of the Union Budget dates, the dates have not been announced so far. Very quickly, what will be the process from here onwards after the in-principle approval from the Cabinet has come in today?

A: What we propose to do is to issue immediately Budget circular which is a necessary communication to all the ministries and departments, so that they start the process of preparing their estimates. Thereafter, we have a series of meetings. So, those consultations will begin early next month and we should be in time to prepare, finalise and present the Budget whenever the dates are decided.

Q: Any likelihood of when that announcement may come and I suppose it is also a part of the process, this will again go to the Cabinet for a nod.

A: In principle, the government has agreed, the Cabinet has given its approval to advance the date of presenting the Budget. Now, what is required to be done, because of the peculiar timing of next year when some state governments are going to polls, those dates will have to be kept in view while the date is finalised.

Q: So, how quickly can we expect this clarity to come in because you are in any case going to issue the Budget circular and you will start the Budget process probably by the end of this month, correct me if I am wrong.

A: The Budget circular will go out in a couple of days. Let me tell you that we are probably keener than you are to know what the exact date will be.

Q: Today the Finance Minister indicated very clearly that no discussion was held in terms of the advancement of the winter session of the parliament. So, also the decision for advancing the Budget session along with the Budget dates of course, all this will be taken up with the business advisory committee of the parliament and also political party consultation. Will it start now in earnest and then you will declare the dates.

A: We will communicate the intention and decision of the government and thereafter the parliament secretariat, they will see what redrawing of the calendar, etc will be required. So, they have to keep in view many other considerations and this will be one of them.

Q: We do not have to wait for the Election Commission to decide the dates for the polls and all of that, that will not come in the way?

A: That is exactly what the Finance Minister has clarified that once there is clarity on those dates and then how you weave in this time table with those dates, that is the crucial thing which will determine the date of presenting the Budget.

Q: And when does this Budget exercise kick off from? October 1 or end of this month?

A: As I said, the exercise kicks off the day we issue the circular which should be in a couple of days and formal consultations that take place will take place either early next month or maybe even end of this month.

Q: A lot of questions were asked on the fiscal impact on the Union Budget once the Rail Budget is merged with it. Could you tell us in a nutshell what will be and what will not be, because many minds have this question that probably the fiscal math will go awry to an extent, once you take on the liabilities also of the railways because they have been running a deficit for a very long time? So, can you explain how will it work out? Will it also affect in anyway India’s borrowing programme because right now we are sitting on a gross borrowing of Rs 5-5.5 lakh crore ordinarily annually. So, how will these numbers now work out?

A: One thing which has to be very clearly understood is that the railways have been meeting their operating expenses from their revenue receipts. So, that arrangement will still continue. As far as our capital expenditure is concerned, government of India in any case through the gross budgetary support has been giving assistance to the railways. So, the gross budgetary support will continue.

Also what will continue is the borrowings which is done for capital projects of the railways, also the leasing arrangement that they have with IRFC. So, those are commercial arrangements which the railways will continue. It is important to realise that what the government has also said is that the functional autonomy of the railways will continue. The administrative structure within which the decisions are taken within the railways, those will also continue.

Q: But, what about the fiscal impacts, if you can explain that?

A: As far as the gross borrowing support was concerned, that was being given by Government of India, for example in the current financial year, it is close to Rs 45,000 crore. Now what the general budget was receiving from the railways by way of dividend, that since now it is a merged budget, government has decided that railways will no longer be required to pay the dividend. If you take this year as an example, the budgetary estimate for the dividend was close to Rs 10,000 crore, it was Rs 9,700 crore to be precise.

First Published on Sep 21, 2016 03:27 pm
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