In India, the budgetary system was historically divided into two distinct parts: the General Budget and the Railway Budget. However, this separation was abolished in 2017.
1. General Budget
Definition: The General Budget, also known as the Union Budget, is the comprehensive financial statement presented by the Finance Minister of India. It covers all aspects of government expenditure and revenue that are not related to the railways.
Components:
- Revenue Budget:
- Revenue Receipts: Taxes (income tax, corporate tax, GST), and non-tax revenue (fees, fines, dividends).
- Revenue Expenditure: Routine expenses like salaries, interest payments, subsidies, and administrative costs.
- Capital Budget:
- Capital Receipts: Borrowings, disinvestment in public sector enterprises.
- Capital Expenditure: Investments in infrastructure (roads, bridges), acquisition of assets, and public sector enterprise funding.
Characteristics:
- Broad Scope: Covers all central government expenditures and receipts except for those related to the railways.
- Focus Areas: Includes various sectors such as defense, health, education, infrastructure, and welfare programs.
Example:
- Revenue Receipts: The central government may collect ₹5 lakh crore from GST and ₹3 lakh crore from income tax.
- Revenue Expenditure: The government might spend ₹4 lakh crore on defense, ₹2 lakh crore on health care, and ₹1 lakh crore on education.
- Capital Expenditure: Investments could include ₹3 lakh crore on road development and ₹2 lakh crore on new machinery for public sector industries.
2. Railway Budget
Definition: The Railway Budget is the part of the budget dedicated specifically to the financial affairs of Indian Railways, including its revenue and expenditure. This budget was presented separately until 2017.
Components:
- Revenue Budget:
- Revenue Receipts: Earnings from passenger fares, freight charges, and other railway-related activities.
- Revenue Expenditure: Operating costs such as maintenance, salaries of railway employees, and other day-to-day operational expenses.
- Capital Budget:
- Capital Receipts: Funds raised through borrowing for investment in railway infrastructure and development.
- Capital Expenditure: Investments in railway infrastructure such as new tracks, stations, and modernization of existing facilities.
Characteristics:
- Focused Scope: Specifically pertains to the financial management of Indian Railways.
- Public and Freight Services: Includes revenues and expenditures related to passenger services, freight operations, and railway infrastructure development.
Example:
- Revenue Receipts: The Railways might earn ₹1 lakh crore from passenger fares and ₹2 lakh crore from freight charges.
- Revenue Expenditure: Operational costs could include ₹70,000 crore for maintenance and ₹30,000 crore for salaries.
- Capital Expenditure: Investments might include ₹1.5 lakh crore for new railway tracks and station upgrades.
Changes Introduced in 2017
Integration of Budgets:
In 2017, the practice of separating the Railway Budget from the General Budget was abolished. The Railway Budget was integrated into the General Budget. This change aimed to streamline financial management and create a more cohesive financial planning process for the country.
Reasons for Integration:
- Unified Financial Management: Integrating the Railway Budget with the General Budget allows for a more holistic view of the government’s financial position and planning.
- Efficiency in Allocation: It simplifies budget preparation and approval processes, eliminating the need for separate presentations and discussions.
- Improved Accountability: A single budget provides clearer accountability and ensures that resources are allocated based on overall priorities rather than sector-specific concerns.
Impact of Integration:
- Comprehensive Budgeting: The General Budget now includes provisions for railways along with other sectors, providing a unified financial statement of the central government.
- Streamlined Processes: Simplified budget preparation and presentation processes, making it easier for the government to manage and monitor expenditures.
Example Post-2017:
- Unified Budget Presentation: In the 2017-18 General Budget, the allocation for Indian Railways, including its revenue and capital expenditure, was included alongside allocations for other sectors like defense, education, and health. This integrated approach ensures that resources are allocated according to the overall fiscal strategy and priorities of the government.
Summary Table
| Aspect | General Budget (Pre-2017) | Railway Budget (Pre-2017) | Post-2017 Changes |
| Definition | Comprehensive budget covering all sectors except railways. | Budget specifically for Indian Railways. | Integrated into the General Budget. |
| Scope | Broad, covering defense, health, education, infrastructure, etc. | Specific to railway operations and infrastructure. | Unified financial management. |
| Receipts | Tax and non-tax revenues from all sectors. | Revenue from passenger fares and freight charges. | Combined revenue sources in the General Budget. |
| Expenditure | Routine and developmental expenditure across various sectors. | Operating costs and infrastructure development for railways. | Integrated expenditure for all sectors. |
| Examples | Revenue receipts of ₹5 lakh crore from GST, capital expenditure on roads. | Revenue receipts of ₹1 lakh crore from fares, capital expenditure on new tracks. | Comprehensive allocation including railways and other sectors. |
Conclusion
Before 2017, the distinction between the General Budget and the Railway Budget was important for understanding the separate financial management of the central government and Indian Railways. With the integration of the Railway Budget into the General Budget, the focus has shifted towards a more unified approach to financial planning and resource allocation, streamlining government operations and enhancing transparency.
