Cabinet approves merger of rail budget with general budget

Cabinet approves merger of rail budget with general budget; advancement of budget presentation and merger of plan and non-plan classification in budget and accounts

The Union Cabinet has approved the proposals of Ministry of Finance on certain landmark budgetary reforms relating to (i) the merger of Railway budget with the General budget, (ii) the advancement of the date of Budget presentation from the last day of February to the 1st of February and (iii) the merger of the Plan and the Non-Plan classification in the Budget and Accounts. All these changes will be put into effect simultaneously from the Budget 2017-18.

Merger of Railway Budget with the General Budget:

The arrangements for merger of Railway budget with the General budget have been approved by the Cabinet with the following administrative and financial arrangements-

(i) The Railways will continue to maintain its distinct entity -as a departmentally run commercial undertaking as at present;

(ii) Railways will retain their functional autonomy and delegation of financial powers etc. as per the existing guidelines;

(iii)The existing financial arrangements will continue wherein Railways will meet all their revenue expenditure, including ordinary working expenses, pay and allowances and pensions etc. from their revenue receipts;

(iv)The Capital at charge of the Railways estimated at Rs.2.27 lakh crore on which annual dividend is paid by the Railways will be wiped off. Consequently, there will be no dividend liability for Railways from 2017-18 and Ministry of Railways will get Gross Budgetary support. This will also save Railways from the liability of payment of approximately Rs.9,700 crore annual dividend to the Government of India;

The presentation of separate Railway budget started in the year 1924, and has continued after independence as a convention rather than under Constitutional provisions.

The merger would help in the following ways:

· The presentation of a unified budget will bring the affairs of the Railways to centre stage and present a holistic picture of the financial position of the Government.
· The merger is also expected to reduce the procedural requirements and instead bring into focus, the aspects of delivery and good governance.
· Consequent to the merger, the appropriations for Railways will form part of the main Appropriation Bill.

Advancement of the Budget presentation:

The Cabinet has also approved, in principle, another reform relating to budgetary process, for advancement of the date of Budget presentation from the last day of February to a suitable date. The exact date of presentation of Budget for 2017-18 would be decided keeping in view the date of assembly elections to be held in States.

This would help in following ways:

· The advancement of budget presentation by a month and completion of Budget related legislative business before 31st March would pave the way for early completion of Budget cycle and enable Ministries and Departments to ensure better planning and execution of schemes from the beginning of the financial year and utilization of the full working seasons including the first quarter.
· This will also preclude the need for seeking appropriation through ‘Vote on Account’ and enable implementation of the legislative changes in tax; laws for new taxation measures from the beginning of the financial year.

Merger of Plan and Non Plan classification in Budget and Accounts:

The third proposal approved by the Cabinet relates to the merger of Plan and Non Plan classification in Budget and Accounts from 2017-18, with continuance of earmarking of funds for Scheduled Castes Sub-Plan/Tribal Sub-Plan. Similarly, the allocations for North Eastern States will also continue.

This would help in resolving the following issues:

· The Plan/Non-Plan bifurcation of expenditure has led to a fragmented view of resource allocation to various schemes, making it difficult not only to ascertain cost of delivering a service but also to link outlays to outcomes.
· The bias in favour of Plan expenditure by Centre as well as the State Governments has led to a neglect of essential expenditures on maintenance of assets and other establishment related expenditures for providing essential social services.
· The merger of plan and non-plan in the budget is expected
to provide appropriate budgetary framework having focus on the revenue, and capital expenditure.
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Cabinet approves the River Ganga (Rejuvenation, Protection and Management) Authorities Order, 2016

The Union Cabinet under the Chairmanship of Prime Minister Shri Narendra Modi has approval the River Ganga (Rejuvenation, Protection and Management) Authorities Order, 2016. The Order lays down a new institutional structure for policy and implementation in fast track manner and empowers National Mission for Clean Ganga to discharge its functions in an independent and accountable manner. It has been decided to grant a Mission status to the Authority with corresponding powers under Environment (Protection) Act, 1986 to take cognizance of the provision of the said Act and follow up thereon. Similarly, there is adequate delegation of financial and administrative powers which will distinctly establish NMCG as both responsibility and accountability centre and effectively accelerate the process of project implementation for Ganga Rejuvenation.

Salient Features:

Briefly, the Order envisages:

1. Creation of the National Council for River Ganga (Rejuvenation, Protection and Management), as an Authority under the Chairperson of Hon’ble Prime Minister, in place of the existing NGRBA for overall responsibility for superintendence of pollution prevention and rejuvenation of river Ganga Basin.

2. Setting up of an Empowered Task Force chaired by Hon’ble Minister of Water Resources, River Development and Ganga Rejuvenation to ensure that the Ministries, Departments and State Governments concerned have:

§ an action plan with specific activities, milestones, and timeliness for achievement of the objective of rejuvenation and protection of River Ganga,

§ a mechanism for monitoring implementation of its action plans.

It will also ensure co-ordination amongst the Ministries and Departments and State Governments concerned for implementation of its action plans in a time bound manner.

3. Declaration of National Mission for Clean Ganga (NMCG) as an Authority with powers to issue directions and also to exercise the powers under the Environment (Protection) Act, 1986 to enable it to carry out efficiently its mandate. The NMCG will have a two-tier management structure with a Governing Council (GC), to be chaired by DG, NMCG. Below the GC, there will be an Executive Committee (EC) constituted out of the GC, to be chaired by the DG, NMCG.

NMCG will comply with the decisions and directions of the National Ganga Council and implement the Ganga Basin Management Plan approved by it; co-ordinate and carry out all activities necessary for rejuvenation and protection of River Ganga and its tributaries.

4. At the State level, it is proposed to create the State Ganga Committees in each of the defined States as Authority, to function as Authorities in respect of each State and perform the superintendence, direction and control over the District Ganga Protection Committees under their jurisdiction.

5. Similarly, the District Ganga Committees in each of the Ganga Bank Districts will carry out the assigned tasks as an Authority at the district level, to take cognizance of local threats and needs of river Ganga and conceptualise such measures as necessary to ensure overall quality of water in river Ganga and monitor various projects being implemented.

The proposed structure is to be implemented through the subordinate legislation route by issue of an Order invoking the provisions under Section 3 of Environment (Protection) Act, 1986 (29 of 1986) relating to creation of authorities to achieve its objectives.

The other main features of the proposal are as follows:

§ This will give more teeth to the NMCG for Clean Ganga for the environmental protection/rejuvenation of River Ganga. It will also ensure proper co-ordination with the local bodies and compliance with the directions of NMCG for pollution abatement of the river Ganga.

§ NMCG will, however, take action only in the event when required action is not taken by CPCB. CPCB shall also take action jointly with NMCG under the provisions of said Act.

§ A special focus of the revamped structure would be to maintain required ecological flows in the river Ganga with the aim of ensuring water quality and environmentally sustainable development.

For taking up fast track creation of sewerage treatment infrastructure in Ganga basin, an innovative model based on Hybrid Annuity has also been approved. This will ensure that the infrastructure created under the project is operational on a sustainable basis.

In order to ensure transparency and cost effectiveness, a provision for concurrent audit, safety audits, research institutions and financial framework has been made.

Background:

The Ganga Action Plan (GAP) Phase-I was launched in 1985 and later GAP Phase-II was initiated in 1993 with the objective of improving the water quality of river Ganga and was later expanded to include some of its tributaries also. In May, 2015, the Government approved the Namami Gange programme as a comprehensive mechanism to take up initiatives for rejuvenation of river Ganga and its tributaries as a Central Sector Scheme with hundred per cent funding by the Union Government. The programme, despite making moderate gains in arresting the declines in water quality, had certain limitations in implementation.

Although, the NMCG has been functional as a registered Society since 2012 its role has been largely limited to fund the projects to implementing organisations. It neither had the mandate to take cognizance of various threats to river Ganga nor the powers to issue directions to the concerned authorities/polluters. While the organisation has been made responsible as custodian of river Ganga in both public eye as well as various courts, the mission is grossly ill-equipped to handle such expectations.

It is expected that the move will ensure effective abatement of pollution and rejuvenation of the River Ganga; maintain ecological flows in the River; impose restrictions on polluting industries; and carry out inspections to ensure compliance. In addition, it is proposed to maintain and disseminate data and carry out research on the condition of the river.

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Cabinet approves provision of submarine optical fibre cable connectivity between mainland (Chennai) and Andaman & Nicobar Islands

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its approval for provision of a direct communication link through a dedicated submarine Optical Fibre Cable (OFC) between Mainland (Chennai) and Port Blair & five other islands viz. Little Andaman, Car Nicobar, Havelock, Kamorta and Great Nicobar.

The estimated cost of the project is Rs. 1102.38 crore including operational expenses for 5 years. The project is likely to be completed by December 2018.

The approval would equip Andaman & Nicobar Islands (ANI) with appropriate bandwidth and telecom connectivity for implementation of e-Governance initiatives; establishment of enterprises & e-commerce facilities. It will also enable the provision of adequate support to educational institutes for knowledge sharing, availability of job opportunities and fulfil the vision of Digital India.

Background:

The Andaman and Nicobar Islands are of immense strategic significance for India. The geographical configuration and the location of the Andaman & Nicobar Islands chain in the Bay of Bengal safeguard India’s eastern seaboard. Provision of secure, reliable, robust, and affordable telecom facilities in these islands is of importance from a strategic point of view to the country and also an important requirement for the socio-economic development of the islands.

Currently the only medium of providing telecom connectivity between Mainland and Andaman & Nicobar Islands is though satellites, but the bandwidth available is limited to 1 Gbps. Satellite bandwidth is very costly and its availability is limited due to which future bandwidth requirement cannot be met solely through it. Then, there is an issue of redundancy, that is, no alternate media is available in case of any emergency. Lack of bandwidth and telecom connectivity is also hampering socio-economic development of the islands. Hence it is essential to have submarine OFC connectivity between the Mainland India and Andaman & Nicobar Islands, being the only option for catering to projected future bandwidth requirements.

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Winding up of Hindustan Diamond Company Private Limited

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval for initiating the process of winding up of Hindustan Diamond Company Private Limited (HDCPL), a 50:50 joint venture of the Government of India and De Beers Centenary Mauritius Limited (DBCML).

The HDCPL was incorporated under the Companies Act, 1956 in 1978. The objective of formation of the Company was to supply rough diamonds to diamond processing industry in India, particularly to small and medium diamond jewellery exporters, who had no direct access to rough diamonds from Diamond Trading Company (DTC), London, the marketing arm of De Beers who held a very large chunk of world’s rough diamonds market.

The winding up of HDCPL is not likely to affect supply of rough diamonds to Indian diamantaires as Indian diamond industry has grown in these years and several Indian players are sightholders with top diamond producers now. Also, with the objective to facilitate the constant supply of rough diamonds and to make India an International Diamond Trading Hub, the Government has created a Special Notified Zone (SNZ) at Bharat Diamond Bourse, Mumbai in 2015. At present viewing operations are being carried out in the SNZ at Mumbai wherein Foreign Mining Companies (FMCs) only display their rough diamond lots to the Indian manufacturers and then take them back. Thereafter the sales are carried through e-auction from offices situated in other countries to Indian manufacturers. This facility has enabled even smaller Indian players to have direct access of supply of rough diamonds.

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Cabinet gives ex-post facto approval to enhancement of Pension for Freedom Fighters

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its ex-post facto approval to enhancement of Pension for Freedom Fighters and for the spouses (widows/widowers), eligible daughters and dependent parents of deceased Freedom Fighters, under the Swatantrata Sainik Samman Pension Scheme (SSSPS), 1980.

The existing pension scheme for Central freedom fighter pensioners and their eligible dependents has been restructured as follows:-

Sl.
No.
Category of Freedom Fighters
Present amount of pension (per month)
Enhanced amount of pension (per month)

1.
Ex-Andaman Political Prisoners/ spouses

Rs. 24,775
Rs. 30,000/-
2.
Freedom fighters who suffered outside British India/spouses
Rs. 23,085/-
Rs. 28,000/-

3.
Other Freedom Fighters / spouses including INA
Rs. 21,395/-
Rs. 26,000/-

4.
Dependent parents/eligible daughters (maximum 3 daughters at any point of time)
Rs. 3,380/-
50% of the sum that would have been admissible to the Freedom Fighter i.e. in the range of Rs. 13,000/- to Rs. 15,000/-

(i) The revised scale of pension has taken effect from 15.O8.2016. Further, the revised total amount of pension will be taken as basic pension for the respective categories of Freedom Fighter pensioners for calculating Dearness Relief.

(ii) The existing Dearness Relief system based on All India Consumer Price Index for Industrial workers, which was so far applicable to freedom fighter pensioners on annual basis, is being discontinued and replaced by the Dearness Allowance system applicable to Central Government employees twice a year. This will be termed as “Dearness Relief”, the appropriate term in case of pensioners.

All freedom fighters and spouses and dependent parents/eligible daughter pensioners of deceased freedom fighters drawing pension under the Swatantrata Sainik Samman Pension Scheme, 1980 would be benefitted by the decision.

Background

. Government of India introduced in 1969, the ‘Ex-Andaman Political Prisoners Pension Scheme’ to honour the freedom fighters who had been incarcerated in the Cellular Jail at Port Blair. In order to commemorate the 25th Anniversary of Independence in 1972, a regular scheme for grant of freedom fighters’ pension was introduced. Thereafter, with effect from 1.8.1980, a liberalized scheme, the Swatantrata Sainik Samman Pension Scheme’ is being implemented. Besides the freedom fighters, spouses (widows.widowers), unmarried and unemployed daughters (up to maximum three at any point of time) and parents of deceased freedom fighters are eligible for pension under the Scheme. Till 2016, a total of 1,71,605 freedom fighters and their eligible dependents have been sanctioned pension under the scheme. At present, 37,981 freedom fighters and their eligible dependent pensioners are covered under the scheme. Out of these, 11,690 are freedom fighters themselves, 24,792 are spouses (widows/ widowers) and 1,490 are daughter pensioners. Instructions have been issued to all the authorized banks for ensuring Aadhar linked disbursement of Freedom Fighter pension as early as possible.

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Cabinet approves enactment of Admiralty (Jurisdiction and Settlement of Maritime Claims) Bill 2016 and to repeal five archaic admiralty statutes

The Union Cabinet under the Chairmanship of Prime Minister Shri Narendra Modi has given its approval to the proposal of Ministry of Shipping to enact Admiralty (Jurisdiction and Settlement of Maritime Claims) Bill 2016 and to repeal five archaic admiralty statutes.

The Bill consolidates the existing laws relating to admiralty jurisdiction of courts, admiralty proceedings on maritime claims, arrest of vessels and related issues. It also repeals five obsolete British statues on admiralty jurisdiction in civil matters, namely, (a) the Admiralty Court Act, 1840 (b) the Admiralty Court Act, 1861, (c) Colonial Courts of Admiralty Act, 1890, (d) Colonial Courts of Admiralty (India) Act, 1891, and (e) the provisions of the Letters Patent, 1865 applicable to the admiralty jurisdiction of the Bombay, Calcutta and Madras High Courts.

Salient Features of Admirability Bill, 2016

This legislative proposal will fulfil a long-standing demand of the maritime legal fraternity. The salient features are as follows:-

· The Bill confers admiralty jurisdiction on High Courts located in coastal states of India and this jurisdiction extends upto territorial waters.
· The jurisdiction is extendable, by a Central Government notification, upto exclusive economic zone or any other maritime zone of India or islands constituting part of the territory of India.
· It applies to every vessel irrespective of place of residence or domicile of owner.
· Inland vessels and vessels under construction are excluded from its application but the Central Government is empowered to make it applicable to these vessels also by a notification if necessary.
· It does not apply to warships and naval auxiliary and vessels used for non-commercial purposes.
· The jurisdiction is for adjudicating on a set of maritime claims listed in the Bill.
· In order to ensure security against a maritime claim a vessel can be arrested in certain circumstances.
· The liability in respect of selected maritime claims on a vessel passes on to its new owners by way of maritime liens subject to a stipulated time limit.
· In respect of aspects on which provisions are not laid down in the Bill, the Civil Procedure Code, 1908 is applicable.

Background:

India is a leading maritime nation and maritime transportation caters to about ninety-five percent of its merchandise trade volume. However, under the present statutory framework, the admiralty jurisdiction of Indian courts flow from laws enacted in the British era. Admiralty jurisdiction relates to powers of the High Courts in respect of claims associated with transport by sea and navigable waterways. The repealing of five admiralty statutes is in line with the Government’s commitment to do away with archaic laws which are hindering efficient governance.
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Cabinet approves USOF support to BSNL for Rural Wire-line connections installed prior to 1.4.2002

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved the proposal to extend subsidy support of Rs. 1,250 crore to Bharat Sanchar Nigam Limited (BSNL) from Universal Service Obligation Fund (USOF), as compensation for deficit incurred by BSNL in operating the Rural Wire-line connections installed prior to 1st April, 2002. The eligible rural wire-line connections installed prior to 1.4.2002 is 32.32 lakh, across India as on 31.3.2014.
The Cabinet also approved that the above subsidy support would be the last and final payment and no further request from BSNL for financial/subsidy support from USOF on this count shall be considered.
In order to make Bharat Sanchar Nigam Limited (BSNL) eligible for subsidy funding on nomination basis from USOF, amendment will be required in Rule 526 of the Indian Telegraph Rules (ITRs), 1951. It stipulates that the criteria for selection of Universal Service Providers shall be made by bidding process from amongst eligible entities for implementation of USOF schemes. Corresponding Amendment in Rule 525 will also be required.
Full/lump-sum amount of Rs. 1,250 Crore shall be disbursed, consequent to necessary amendment of the ITRs and signing of USOF agreement with BSNL. Utilization certificate of’ the USOF subsidy disbursed towards operation and maintenance of the rural wire-line connections would be submitted by BSNL.

Background:
USOF since its inception in 2002 has been providing subsidy for BSNL for the rural wire line connections installed prior to 1.4.2002. A total of Rs. 8,692 crore has been extended as USOF subsidy support till date, for the rural wire-line connections, installed by BSNL prior to 1.4.2002. The details are as follows:
USOF Scheme

Basis

Amount (Rs.crore)

Period of support

RDEL-D

Difference between regulated rental and actual rental

1192

1st April 2002 to
31st January 2004

RDEL-P

TRAI recommendations dated 27.03.2008

6000

18th July 2008 to 17thJuly 2011

RDEL-P

TRAI recommendations dated 14.05.2012

1500

18th July 2011 to 17thJuly 2012

The TRAI in its report dated 14.05.2012 had recommended amount of subsidy support-of Rs. 1,500 crore for the period 18th July 2011 to 17th July 2012 and Rs. 1,250 crore for the 18th July 2012 to 17th July 2013.
Telecom Commission, in its meeting dated 11.12.2012, considered the views of the TRAI and USOF and directed that an assessment be carried out of the current status of the infrastructure.
Telecom Commission/EFC in its meeting dated 14th July 2015 considered the findings of the evaluation/assessment study conducted by National Institute of Communication Finance and recommended the subsidy support of Rs. 1250 crore to BSNL from USOF, as compensation for deficit incurred by BSNL in operating the Rural Wire-line connections installed prior to 1st April 2002 Telecom Commission also recommended that the subsidy support of Rs. 1250 crore would be the last and final payment and no further request from BSNL for financial/subsidy support from USOF on this count shall be considered.

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Cabinet approves raising Extra Budgetary Resources to augment infrastructure spending

The Union Cabinet under the Chairmanship of Prime Minister Shri Narendra Modi has given its approval for raising a total of Rs. 31,300 crore in the financial year 2016-17 and to service the principal and interest against the Extra Budgetary Resources (EBR) of Rs. 16,300 crore by Government of India to augment infrastructure spending.

Out of the EBR of Rs.31,300 crore, it is proposed to finance the funds to be raised by Power Finance Corporation (PFC), Indian Renewable Energy Development Agency (IREDA), Inland Waterways Authority of India (IWAI), and National Bank for Agriculture and Rural Development (NABARD) by Government of India. This implies that the principal and the interest in respect of the EBR of Rs.16,300 crore to be raised by PFC, IREDA, IWAI, and NABARD shall be financed by Government of India by making suitable budget provisions in the Demand of respective Ministries/Departments.

The move is intended to supplement the efforts of the Government to improve infrastructure spending and to improve the revenue-capital mix of the expenditure for a more sustainable growth.