Government Budget

Notes

Art. 112 requires the President to lay before Parliament an Annual Financial Statement (the Budget): the estimated receipts and expenditure for the financial year (1 April to 31 March). The Budget Division of the Department of Economic Affairs (Ministry of Finance) prepares it; the Finance Minister presents it in the Lok Sabha. The first Union Budget was presented by R.K. Shanmukham Chetty (26 November 1947). Since 2017 it has been presented on 1 February; the Railway Budget was merged in 2017; and it has been paperless since 2021-22.

Budget documents

Annual Financial Statement (Art. 112); Demands for Grants (Art. 113); Appropriation Bill (Art. 114); Finance Bill (Art. 110); Expenditure Budget; Receipts Budget; Budget at a Glance.
FRBM statements: Macroeconomic Framework Statement, Medium-term Fiscal Policy cum Fiscal Policy Strategy Statement.
Outcome Budget; Gender Budget Statement (since 2005-06).
The Economic Survey (by the Chief Economic Adviser) is released just before the Budget; it is not part of the Budget.

Components

Receipts: Revenue receipts (tax revenue net of States' share, and non-tax revenue) and capital receipts (borrowings and other liabilities, recovery of loans, disinvestment).
Expenditure: Revenue expenditure and capital expenditure. The plan/non-plan distinction was abolished from 2017-18.

Budget process: presentation and speech; general discussion; scrutiny by Departmentally Related Standing Committees; voting on Demands for Grants (Lok Sabha only); Appropriation Bill; Finance Bill. Vote on Account (Art. 116) and interim budgets are used before general elections.

Types of budgets: balanced, surplus and deficit budgets; zero-based budgeting; performance and outcome budgeting; gender and green budgeting.

Where the rupee comes from and goes: major sources are borrowings, GST, income tax and corporation tax; the biggest uses are interest payments, States' share of taxes, centrally sponsored and central sector schemes, defence, subsidies and pensions.

Key Points

Art. 112: Annual Financial Statement; presented on 1 February since 2017.
Documents: Demands for Grants, Appropriation Bill, Finance Bill, FRBM statements.
Plan/non-plan classification abolished in 2017-18; the Railway Budget merged in 2017.
Vote on Account (Art. 116) before elections.
Economic Survey precedes the Budget but is separate.

MCQs

Q1. The Annual Financial Statement is mentioned in: (a) Art. 110 (b) Art. 112 (c) Art. 114 (d) Art. 116 Ans: (b).