Union Budget
Under Article 112 of the constitution, a statement of estimated
receipts and expenditure, called the ‘Annual Financial Statement’, has to be
placed before Parliament for each financial year.
This Statement is the main budget document. It is an estimate of
the Government’s revenue and expenditure at the end of a fiscal year, which
runs from April 1 to March 31.
A Union Budget is the most comprehensive report of the
Government’s finances, in which revenues from all sources and outlays to all
activities are consolidated. The budget also contains estimates of the
Government’s accounts for the next fiscal, called budgeted
estimates.
Capital Budget
The capital budget consists of capital receipts and payments.
Capital receipts are Government loans raised from the public, Government
borrowings from the Reserve Bank and treasury bills, divestment of equity
holding in public sector enterprises, loans received from foreign Governments
and bodies, securities against small savings, State provident funds, and
special deposits.
Capital payments refer to capital expenditures on construction of
capital projects and acquisition of assets like land, buildings machinery and
equipment.
It also includes investments in shares, and loans and advances
granted by the Central Government to State Governments, Government companies,
corporations and other parties.
Revenue Budget
·
The revenue budget
consists of revenue receipts of the Government and its expenditure. Revenue
receipts are divided into tax and non-tax revenue. Tax revenues constitute
taxes like income tax, corporate tax, excise, customs, service and other duties
that the Government levies.
·
The non-tax revenue
sources include interest on loans, dividend on investments etc.
·
Revenue expenditure is
the expenditure incurred on the day-to-day running of the Government and its
various departments, and for services that it provides.
·
It also includes
interest on its borrowings, subsidies and grants given to State Governments and
other parties.
·
This expenditure does
not result in the creation of assets. In case the difference between revenue
receipts and revenue expenditure is negative, there is a revenue deficit.
·
It shows the shortfall
of the Government’s current receipts over current expenditure. If the capital
expenditure and capital receipts are taken into account too, there will be a
gap between the receipts and expenditure in a year. This gap constitutes the
overall budgetary deficit, and it is covered by issuing 91-day Treasury Bills,
mostly held by the Reserve Bank.
·
Revenue surplus is the
excess of revenue receipts over revenue expenditure.
Fiscal Deficit
This is the gap between the Government’s total spending and the
sum of its revenue receipts and non-debt capital receipts.
It represents the total amount of borrowed funds required by the
Government to completely meet its expenditure. The gap is bridged through
additional borrowing from the Reserve Bank of India, issuing Government
securities etc. Fiscal deficit is one of the major contributors to inflation.
Primary Deficit
The primary deficit is the fiscal deficit minus interest payments.
It tells how much of the Government’s borrowings are going towards meeting
expenses other than interest payments.
Finance Bill
The Government proposals for the levy of new taxes, alterations in
the present tax structure, or continuance of the current tax structure are placed
before the Parliament in this bill. The bill contains amendments proposed to
direct and indirect taxes.
Direct and Indirect Taxes
Direct taxes are levied on the incomes of individuals and
corporates. For example, income tax, corporate tax etc. Indirect taxes are paid
by consumers when they buy goods and services. These include excise duty,
customs duty etc.
Some Other Terms
Central plan outlay : It refers to the allocation of monetary
resources among the different sectors in the economy and the ministries of the
Government.
Public account : The Government acts like a banker for
transactions relating to provident funds, small savings collection etc.The
funds that the Government thus receives from its bank like operations are kept
in the public account, from which the related disbursements are made.
These funds do not belong to the Government and have to be paid
back to the persons and authorities who have deposited them.
Ad-valorem duties : These are the duties determined as a certain
percentage of the price of products.
Balance of payments : Balance of payments is the difference between
the demand for, and supply of, a country’s currency on the foreign exchange
market.
Budget estimates : It is an estimate of fiscal and revenue deficits
for the year. The term is associated with the estimates of the Centre’s
spending during the financial year and the income received through taxes.
Capital receipt : Loans raised by the Centre from the market.
Government borrowings from the Reserve Bank and other parties, sale of Treasury
Bills, and loans received from foreign governments form a part of capital
receipt.
Other items that also fall under this category include recovery of
loans granted by the Centre to State Governments and proceeds from
disinvestments of Government stake in public sector undertakings.
Consolidated fund : Under this, the Government pools all its funds
together.
It includes all Government revenues, loans raised, and recoveries
of loans granted.
All expenditure of the Government is incurred from the
consolidated fund and no amount can be withdrawn from the fund without
authorisation of the Parliament.
Contingency fund : This is a fund used for meeting emergencies
where the Government cannot wait for an authorisation of the Parliament. The Government
subsequently obtains Parliamentary approval for the expenditure. The amount
spent from the contingency fund is returned to the fund later.
Monetary policy : This comprises actions taken by the central bank
to regulate the level of money or liquidity in the economy, or change the
interest rates.
No comments:
Post a Comment