Morung Express Feature
What is Budget?
Budget is an Annual financial statement of the estimated receipts and expenditure of the Government for the financial year stipulated under the Article 112 of the Constitution in India. This statement is the annual financial statement. Till 2017, the budget was presented on the last working day of February by the Finance Minister of India in Parliament. Once passed by both the houses of parliament and approved by the President of India, the Budget comes into effect from April 1. The period from April 1 of a particular year to March 31 next year is, thus, counted as the financial year in India. All the state and union territories, more or less, follows the same pattern.
Why do we need Budget?
The Budget is formulated to optimally allocate the Government’s resources to different sectors and schemes, so that the broad objectives of the government could be achieved. It presents government’s proposed revenues and expenditure for the coming financial year. It also determines how adequately the financial and resource management responsibilities have been discharged in the last financial year and ensures accountability of the Government to the Parliament or Assembly.
How Budget is categorised?
Budget is usually categorized into receipts and expenditure. RECEIPTs are the income receipts of the government from all the sources in a particular financial year and further into are divided:
a) Revenue receipts: Revenue receipts are those receipts, which neither create liability nor reduce the assets of the Government. These include revenue received from taxes, cess, interest payments, dividend on investments etc. They are generally recurring in nature.
b) Capital Receipts: Capital receipts are those which either create liability or reduce the assets of the Government. These include Government borrowings, disinvestment etc.
EXPENDITURES are the cost incurred on goods and services already received and paid for by the government in a particular finincial year and categorized in two ways:
a) Revenue Expenditure: Expenditure that does not lead to creation of any assets or any reduction in existing liabilities of the government. This includes Salary payments, Pensions, interest payments, other administrative expenditures etc. These are generally recurring in nature and deal with day-to-day administrative costs of the government.
b) Capital Expenditure: This refers to the expenditure that leads to creation of assets or reduction in liabilities of the Government. Examples include infrastructure building, acquiring assets, repayment of loans etc.
Types: In simple words, when revenue and expenditure are equal, it is called a Balanced Budget. When anticipated expenditure is greater than revenues, it is called a Deficit Budget and when anticipated revenues exceed expenditure, it is a Surplus Budget.
Fiscal Deficit: When the government’s non-borrowed receipts fall short of its entire expenditure, it has to borrow money from the public to meet the shortfall. The excess of total expenditure over total no borrowed-receipts are called the fiscal deficit. Financing of development through such measures are called Deficit Financing.
What is meant by the term ‘Vote on Account’?
Since Parliament is not able to vote the entire budget before the commencement of the new financial year, the necessity to keep enough finance at the disposal of Government in order to allow it to run the administration. A special provision is, therefore, made for "Vote on Account" by which Government obtains the Vote of Parliament for a sum sufficient to incur expenditure on various items for a part of the year. Normally, the Vote on Account is taken for two months only. But during election year or when it is anticipated that the main Demands and Appropriation Bill will take longer time than two months, the Vote on Account may be for a period exceeding two months.
What is meant by “charged" expenditure on the Consolidated Fund?
Charged expenditure includes the emoluments of the President and the salaries and allowances of the Chairman and Deputy Chairman of Rajya Sabha and the Speaker and Deputy Speaker of Lok Sabha, Judges of Supreme Court, Comptroller and Auditor General of India and certain other items specified in the Constitution of India under Article 112(3). Discussion in Lok Sabha on ‘charged’ expenditure is permissible but such expenditure is not voted by the House.
Can the budget be passed more than once in a year?
Yes, Budget can be passed more than once in a year. During an election year, the ruling government presents a shorter version of the General Budget, called Interim budget. This is done because a new Government will be formed after the elections, which will then prepare a Budget for the rest of the financial year.
What are the categories of Government Account?
The Government account is categorized into the following - Consolidated Fund: Under Article 266(1) of the Constitution of India, Consolidated Fund of India is the most important of all government funds. All revenues raised by government, money borrowed and receipts from loans given by government flow into it. All government expenditures other than certain exceptional items met from Contingency Fund and Public Account are made from this account. No money can be appropriated from the fund except in accordance with the law.
Contingency Fund: Any urgent or unforeseen expenditure is met from this fund. It is constituted under Article 267 of the Constitution of India. It is a Rs.500cr fund which is at the disposal of the President of India. Any expenditure from this fund requires subsequent approval from the Parliament and any amount withdrawn must be returned to the Contingency Fund from the Consolidated Fund of India.
Public Account: Under provisions of Article 266(1) of the Constitution of India, Public Account is used in relation to all the fund flows where Government is acting as a banker. Examples include Provident Funds and Small Savings. This money does not belong to government but is to be returned to the depositors. The expenditure from this fund need not be approved by the Parliament.
What are Supplementary demands for grants?
Supplementary Demands for Grants are normally presented in each session of the Parliament when: a. Amount authorised during current financial year is insufficient b. Need arises for additional expenditure on existing service or expenditure on new service. c. For recouping Contingency find advance
What are Revised Estimates?
Revised Estimates are mid-year review of possible expenditure, taking into account the trend of expenditure, New Services and New Instrument of Services etc. Revised Estimates are not voted by the Parliament, and hence by itself do not provide a35ny authority for expenditure. Any additional projections made in the Revised Estimates need to be authorized for expenditure through the Parliament’s approval or by Re-appropriation order.
What are Excess grants?
If the total expenditure under a Grant exceeds the provision allowed through its original Grant and Supplementary Grant, then, the excess requires regularization by obtaining excess Grant from the Parliament under Article 115 of the Constitution of India. It will have to go through the whole process as in the case of the Annual Budget, i.e. through presentation of Demands for Grants and passing of Appropriation Bills.
.jpg)
.jpg)
