Finance minister Arun Jaitley will present his fourth budget later this week. This budget will be unique in more ways than one. First, the government will do away with the taxonomy of plan and non-plan expenditure. The outgo will now be classified as revenue and capital expenditure. Second, the Union budget will subsume the railway budget. Both are steps in the right direction and are likely to improve outcomes.
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But there are other issues that will increase complications. For example, the implementation of the goods and services tax later in the year will require adjustments in revenue projection. Also, the government will need to account for the effect of the currency swap on economic activity while making the revised and budget estimates. However, the problem is that the picture is still not very clear. The advance estimates of national income given by the Central Statistics Office didn’t account for the currency swap.
Therefore, to avoid confusion among stakeholders, it will be important that the changes are communicated well.