A separate Railway Budget was started by the British in 1924. The Cabinet also agreed in-principle to advance the date of General Budget's presentation in Parliament from the usual February end.

"From coming year the Railway and the General Budget will be amalgamated. There will be only one Budget. And secondly, distinction between plan and non-plan expenditure will be ended from next year," Finance Minister Arun Jaitley said after the Cabinet meeting.

The actual date for presentation of the General Budget for 2017-18 will be decided by the government after taking into account the ensuing Assembly elections, Finance Minister Arun Jaitley said while briefing the media about the Cabinet decisions.

The Cabinet has also decided to do away with the Plan/ Non-Plan expenditure classification in Budget 2017-18 and replace with 'capital and receipt'.

Jaitley said the government is in favour of advancing the budgetary exercise to that it could be completed before March 31 and expenditure on public-funded schemes could begin from April 1.

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.

Economic Affairs Secretary Shaktikanta Das said the Central Statistical Organisation (CSO) will provide provisional Advance Estimates of national income or GDP by January 7 so that the data can be incorporated in preparation of Budget.

The provisional advance estimates, he hoped, would be in line with the one normally released by February 7. Das said the government will issue Budget circular in a day or two.

Rail Minister Suresh Prabhu said the merger of rail and general budgets will not impact the functional autonomy of the railways but help in enhancing capital expenditure.

"One single budget will mean railway and general budget will work in harmony," Prabhu said, adding Railways will not have to pay dividend to the Government.

Here are the highlights of Arun Jaitley's press conference:

  • Rail budget and General budget will be amalgamated from now, there will only be one budget: Finance Minister Arun Jaitley.
  • The functional autonomy will continue to be maintained: Finance Minister Arun Jaitley.
  • Reforms also include merger of the Plan and the Non-Plan classification in the Budget and Accounts: Arun Jaitley.
  • Cabinet gives ex-post facto approval to enhancement of Pension for Freedom Fighters and their eligible dependants: Arun Jaitley.
  • The revised scale of pension has taken effect from Independence Day 2016: Arun Jaitley.