India to merge rail, general budgets; end non-plan, plan distinction

New Delhi: India on Wednesday decided to do away with a 92-year-old legacy of a separate general and railway budget by unifying them and do away with differentiating plan and non-plan expenditure. "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 here after the Cabinet meeting. Non-plan expenditure is what the government spends on the so-called non-productive areas, such as salaries, subsidies, loans and interest, while plan expenditure pertains to the money to be set aside for productive purposes, like the various projects of ministries. Finance ministry officials said after the abolition of the Planning Commission, the relevance of plan and non-plan expenditure is lost, and a better indicator of productive and general expenditure will be a distinction under the heads of revenue and capital.