Key to India New Budget 2009.
1.The Budget documents presented to Parliament comprise, besides the Finance Minister's Budget Speech, of the following:
C. Appropriation Bill
D. Finance Bill
E. Memorandum Explaining the Provisions in the Finance Bill, 2009
F. Macro-economic framework for the relevant financial year
G. Fiscal Policy Statement for the financial year
H. Medium Term Fiscal Policy Statement
I. Expenditure Budget Volume -1
J.
Expenditure Budget Volume -2
K. Receipts Budget
L. Budget at a glance
M. Highlights of Budget
N. Status of Implementation of Announcements made in Finance Minister's
Budget Speech of the previous financial year./span>
The documents shown from Serial A, B, C and D are mandated by Art. 112, 113,
114(3) and 110(a) of the Constitution of India respectively while the
documents at Serial F, G and H are presented as per the provisions of the
Fiscal Responsibility and Budget Management Act 2003.
Other documents are in the nature of explanatory statements supporting the
mandated documents with narrative or other content in a user friendly format
suited for quick or contextual references. Hindi version of all these
documents is also presented to Parliament. A web version is hosted at
http://indiabudget.nic.in/ub2009-10(I)/ubmain.htm,
,
with hyperlinks, intended to make surfing more efficient.
2.
In addition to the above,
individual Departments/Ministries also prepare and present to Parliament
their Detailed Demands for Grants, Performance and Outcome Budget, and their
Annual Reports.
The Economic Survey which highlights the economic trends in the country and
facilitates a better appreciation of the mobilization of resources and their
allocation in the Budget is brought out by the Economic Division of
Department of Economic Affairs, Ministry of Finance. The Economic Survey is
presented to Parliament usually in advance of the Union Budget.
3.
Pending presentation of the Regular Budget by the new Government later in
the year, the Interim Budget being presented in February 2009 comprises the
documents listed in para 1 above (except the document at serial E).
4.1. A brief description of Budget documents listed in para 1 is given
below.
4. (A)
Annual Financial Statement (AFS),
the core budget document, shows estimated receipts and disbursements by the
Government of India for 2009-10 in relation to estimates for 2008-09 as also
expenditure for the year 2007-08. The receipts and disbursements are shown
under the three parts, in which Government Accounts are kept viz.,(i)
Consolidated Fund, (ii) Contingency Fund and (iii)
Public Account.
Under the Constitution, Annual Financial Statement distinguishes expenditure
on revenue account from other expenditure. Government Budget, therefore,
comprises Revenue Budget and Capital Budget. The estimates of expenditure
included in the Annual Financial Statement are for the net expenditure,
i.e., after taking into account the recoveries, as will be reflected in the
accounts.
The significance of the Consolidated Fund, the Contingency Fund and the
Public Account as well as the distinguishing features of Revenue and Capital
Budget are given briefly below.
(i)
The existence of the Consolidated Fund of India (CFI) flows from Article 266
of the Constitution. All revenues received by Government, loans raised by
it, and also its receipts from recoveries of loans granted by it form the
Consolidated Fund. All expenditure of Government is incurred from the
Consolidated Fund of India and no amount can be drawn from the Consolidated
Fund without authorisation from Parliament.
(ii)
Article 267 of the Constitution authorises the Contingency Fund which is an
imprest placed at the disposal of the President of India facilitate
Government to meet urgent unforeseen expenditure pending authorization from
Parliament. Parliamentary approval for such unforeseen expenditure is
obtained, post-facto, and an equivalent amount is drawn from the
Consolidated Fund to recoup the Contingency Fund. The corpus of the
Contingency Fund as authorized by Parliament presently stands at Rs. 500
crore.
(iii)
Moneys held by Government in Trust as in the case of Provident Funds, Small
Savings collections, income of Government set apart for expenditure on
specific objects like road development, primary education, Reserve/Special
Funds etc. are kept in the Public Account. Public Account funds do not
belong to Government and have to be finally paid back to the persons and
authorities who deposited them. Parliamentary authorisation for such
payments is, therefore, not required, except where amounts are withdrawn
from the Consolidated Fund with the approval of Parliament and kept in the
Public Account for expenditure on specific objects, in which case, the
actual expenditure on the specific object is again submitted for vote of
Parliament for drawl from the Public Account for incurring expenditure on
the specific object.
(iv)
Revenue Budget consists of the revenue receipts of Government (tax revenues
and other revenues) and the expenditure met from these revenues. Tax
revenues comprise proceeds of taxes and other duties levied by the Union.
The estimates of revenue receipts shown in the Annual Financial Statement
take into account the effect of various taxation proposals made in the
Finance Bill. Other receipts of Government mainly consist of interest and
dividend on investments made by Government, fees, and other receipts for
services rendered by Government. Revenue expenditure is for the normal
running of Government departments and various services, interest payments on
debt, subsidies, etc. Broadly the expenditure which does not result in
creation of assets for Government of India is treated as revenue
expenditure. All grants given to State Governments/Union Territories and
other parties are also treated as revenue expenditure even though some of
the grants may be used for creation of assets.
(v)
Capital Budget consists of capital receipts and capital payments. The
capital receipts are loans raised by Government from public, called market
loans, borrowings by Government from Reserve Bank and other parties through
sale of Treasury Bills, loans received from foreign Governments and bodies,
and recoveries of loans from State and Union Territory Governments and other
parties. Capital payments consist of capital expenditure on acquisition of
assets like land, buildings, machinery, equipment, as also investments in
shares, etc., and loans and advances granted by Central Government to State
and Union Territory Governments, Government companies, Corporations and
other parties. Capital Budget also incorporates transactions in the Public
Account.
(vi)
Accounting Classification
•
The estimates of receipts and disbursements in the Annual Financial
Statement and of expenditure in the Demands for Grants are shown according
to the accounting classification prescribed under Article 150 of the
Constitution, which enables Parliament and the public to make a meaningful
analysis of allocation of resources and purposes of Government expenditures.
•
The Annual Financial Statement shows separately, certain disbursements as
charged on the Consolidated Fund of India, where the Constitution mandates
such items of expenditure, like emoluments of the President, salaries and
allowances of the Chairman and the Deputy Chairman of the Rajya Sabha and
the Speaker and the Deputy Speaker of the Lok Sabha, salaries, allowances
and pensions of Judges of the Supreme Court, Comptroller and Auditor-General
of India and the Central Vigilance Commission, interest on and repayment of
loans raised by Government and payments made to satisfy decrees of courts
etc. These items of expenditure are charged on the Consolidated Fund of
India and are not required to be voted by the Lok Sabha.
4. (B)
Demands for Grants
(i)
Article 113 of the Constitution mandates that the estimates of expenditure
from the Consolidated Fund of India included in the Annual Financial
Statement and required to be voted by the Lok Sabha are submitted in the
form of Demands for Grants. The Demands for Grants are presented to the Lok
Sabha along with the Annual Financial Statement. Generally, one Demand for
Grant is presented in respect of each Ministry or Department. However, in
respect of large Ministries or Departments more than one Demand is
presented. In regard to Union Territories without Legislature, a separate
Demand is presented for each of the Union Territories. In budget 2009-10
there are 105 Demands for Grants. Each Demand first gives the totals of
'voted' and 'charged' expenditure as also the 'revenue' and 'capital'
expenditure included in the Demand separately and also the grand total of
the amount of expenditure for which the Demand is presented. This is
followed by the estimates of expenditure under different major heads of
account. The breakup of the expenditure under each major head between 'Plan'
and 'Non-Plan' is also given. The amounts of recoveries taken in reduction
of expenditure in the accounts are also shown. A summary of Demands for
Grants is given at the beginning of this document, while details of 'New
Service' or 'New Instrument of Service' such as formation of a new company,
undertaking or a new scheme, etc., if any, are indicated at the end of the
document.
(ii)
Each Demand normally includes the total provisions required for a service,
that is, provisions on account of revenue expenditure, capital expenditure,
grants to State and Union Territory Governments and also loans and advances
relating to the service. Where the provision for a service is entirely for
expenditure charged on the Consolidated Fund of India, for example, interest
payments (Demand for Grant No. 34), a separate Appropriation, as distinct
from a Demand, is presented for that expenditure and it is not required to
be voted by Lok Sabha. Where, however, expenditure on a service includes
both 'voted' and 'charged' items of expenditure, the latter are also
included in the Demand presented for that service but the 'voted' and
'charged' provisions are shown separately in that Demand.
4. (C) Appropriation Bill
After the Demands for Grants are voted by the Lok Sabha, Parliament's
approval to the withdrawal from the Consolidated Fund of the amounts so
voted and of the amount required to meet the expenditure charged on the
Consolidated Fund is sought through the Appropriation Bill. Under Article
114(3) of the Constitution, no amount can be withdrawn from the Consolidated
Fund without the enactment of such a law by Parliament.
The whole process beginning with the presentation of the Budget and ending
with discussions and voting on the Demands for Grants requires sufficiently
long time. The Lok Sabha is, therefore, empowered by the Constitution to
make any grant in advance in respect of the estimated expenditure for a part
of the financial year pending completion of procedure for the voting of the
Demands. The purpose of the 'Vote on Account' is to keep Government
functioning, pending voting of 'final supply'. The Vote on Account is
obtained from Parliament through an Appropriation (Vote on Account) Bill.
4. (D)
Finance Bill
At the time of presentation of the Annual Financial Statement before
Parliament, a Finance Bill is also presented in fulfilment of the
requirement of Article 110 (1)(a) of the Constitution, detailing the
imposition, abolition, remission, alteration or regulation of taxes proposed
in the Budget. A Finance Bill is a Money Bill as defined in Article 110 of
the Constitution. It is accompanied by a Memorandum explaining the
provisions included in it.
4. (E) Memorandum Explaining the Provisions in the Finance Bill
To facilitate understanding of the taxation proposals contained in the
Finance Bill, the provisions and their implications are explained in the
document titled Memorandum Explaining the Provisions of the Finance Bill.
4. (F)
Macro-economic Framework Statement
The Macro-economic Framework Statement, presented to Parliament under
Section 3(5) of the Fiscal Responsibility and Budget Management Act and the
rules made thereunder contains an assessment of the growth prospects of the
economy with specific underlying assumptions. It contains assessment
regarding the GDP growth rate, fiscal balance of the Central Government and
the external sector balance of the economy.
4. (G)
Fiscal Policy Strategy Statements
The Fiscal Policy Strategy Statement, presented to Parliament under Section
3(4) of the Fiscal Responsibility and Budget Management Act, outlines the
strategic priorities of Government in the fiscal area for the ensuing
financial year relating to taxation, expenditure, lending and investments,
administered pricing, borrowings and guarantees. The Statement explains how
the current policies are in conformity with sound fiscal management
principles and gives the rationale for any major deviation in key fiscal
measures.
4. (H)
Medium-term Fiscal Policy Statement
The Medium-term Fiscal Policy Statement, presented to Parliament under
Section 3(2) of the Fiscal Responsibility and Budget Management Act 2003,
sets out three-year rolling targets for four specific fiscal indicators in
relation to GDP at market prices namely (i) Revenue Deficit, (ii) Fiscal
Deficit, (iii) Tax to GDP ratio and (iv) Total out-standing Debt at the end
of the year. The Statement includes the underlying assumptions, an
assessment of sustainability relating to balance between revenue receipts
and revenue expenditure and the use of capital receipts including market
borrowings for generation of productive assets.
4.2
To facilitate a more comprehensive understanding of the major features of
the Budget, certain other explanatory documents are presented. These are
briefly summarized below.
4. (I)
Expenditure Budget Volume-1
(i)
This document deals with revenue and capital disbursements of various
Ministries/Departments and gives the estimates in respect of each under
'Plan' and 'Non-Plan'. It also gives analysis of various types of
expenditure and broad reasons for the variations in estimates.
(ii)
Under the present accounting and budgetary procedures, certain classes of
receipts, like payments made by one department to another and receipts of
capital projects or schemes, are taken in reduction of the expenditure of
the receiving department. The estimates of expenditure included in the
Demands for Grants are for the gross amounts. While the estimates of
expenditure included in the Annual Financial Statement
are for the net expenditure, after taking into account the recoveries. The
document Expenditure Budget makes certain other refinements like netting
expenditure of related receipts so that inflation of receipts and
expenditure figures are avoided and there can be a better appreciation of
the magnitudes of various expenditure. Contributions to
International bodies and estimated strength of
establishment of various Government Departments and provision therefor
are shown in separate annexes. A statement each showing (i)
Plan grants and loans released by
Ministries/Departments directly to State and district level autonomous
bodies, under various Central and Centrally Sponsored Plan schemes,
(ii) Gender Budgeting and
(iii) Schemes for development of Scheduled Castes and
Scheduled Tribes are also included in this document.
(iii)
Plan Outlay
Plan expenditure forms a sizeable proportion of the total expenditure of the
Central Government. The Demands for Grants of the various Ministries show
the Plan expenditure under each head separately from the Non-Plan
expenditure. The Expenditure Budget Vol. 1 also gives the total Plan
provisions for each of the Ministries arranged under the various heads of
development and highlights the budget provisions for the more important Plan
programmes and schemes. A description of important schemes included in the
Plan along with the objectives, targets and achievements is given in the
Outcome Budget of the respective Ministry. Variations in the estimates of
Plan expenditure are also explained.
(iv) Public Sector Enterprises
A large part of the Plan expenditure incurred by the Central Government is
through public sector enterprises. Budgetary support for financing outlays
of these enterprises is provided by Government either through investment in
share capital or through loans. Expenditure Budget Vol. 1 shows the
estimates of capital and loan disbursements to public sector enterprises in
2008-2009 and 2009-2010 for Plan and Non-Plan purposes and also the extra
budgetary resources available for financing their Plans. A detailed
report on the working of public sector enterprises is given in the document
titled 'Public Enterprises Survey' brought out separately by the
Department of Public Enterprises. A report on
the working of the enterprises under the control of the various
administrative Ministries is also given in the Annual Reports of the various
Ministries circulated to Members of Parliament separately. The annual
reports along with the audited accounts of each of the Government companies
are also separately laid before Parliament. Besides, the reports of the
Comptroller and Auditor General of India on the
working of various public sector enterprises are also laid before
Parliament.
(v) Commercial Departments
Railways is the principal departmentally-run commercial undertaking of
Government. The Budget of the Ministry of Railways and the Demands for
Grants relating to Railway expenditure are presented to Parliament
separately. The total receipts and expenditure of the Railways are, however,
incorporated in the Annual Financial Statement of the Government of India.
To portray the actual working and not inflate either receipts or
expenditure, the expenditure as reflected in the Receipts Budget &
Expenditure Budget Vol. 1 and Vol. 2 has been taken net of receipts.
The Demands for Grants of the Department of
Telecommunications are presented along with other Demands of the
Central Government.
(vi) The receipts and expenditure of the Defence Department shown in the
Annual Financial Statement, are explained in greater detail in the document
Defence Services Estimates presented along with the Detailed Demands for
Grants of the Ministry of Defence.
(vii)
The details of grants given to bodies other than State and Union Territory
Governments are given in the statements of Grants-in-aid paid to
non-Government bodies appended to Detailed Demands for Grants of the various
Ministries. Annexure 5 to Expenditure Budget Vol.1 shows details of
grants-in-aid exceeding Rs. 5 lakhs (recurring) or Rs. 10 lakhs
(non-recurring) to private institutions, organizations and individuals
sanctioned during the year 2007-08.
4. (J)
Expenditure Budget Volume-2
The provisions made for a scheme or a programme may spread over a number of
Major Heads in the Revenue and Capital sections in a Demand for Grants. In
the Expenditure Budget Vol. 2, the estimates made for a scheme/programme are
brought together and shown on a net basis at one place, by Major Heads. To
understand the objectives underlying the expenditure proposed for various
schemes and programmes in the Demands for Grants, suitable explanatory notes
are included in this volume in which, wherever necessary, brief reasons for
variations between the Budget estimates and revised estimates for the
current year and requirements for the ensuing Budget year are also given.
4. (K)
Receipts Budget
EEstimates
of receipts included in the Annual Financial Statement are further analysed
in the document "Receipts Budget". The document provides details of tax and
non-tax revenue receipts and capital receipts and explains the estimates.
The document also provides the arrears of tax revenues and non-tax revenues,
as mandated under the Fiscal Responsibility and Budget Management Rules,
2004.Trend of receipts and
expenditure along with deficit indicators,
statement pertaining to National Small Savings Fund
(NSSF), statement of revenues foregone,
statement of liabilities, statement of guarantees given by the government,
statements of assets and details of external assistance are also included in
Receipts Budget.
4. (L)
Budget at a Glance
(i)
This document shows in brief, receipts and disbursements along with broad
details of tax revenues and other receipts. This document also exhibits
broad break-up of expenditure - Plan and Non-Plan, allocation of Plan
outlays by sectors as well as by Ministries/Departments and details of
resources transferred by the Central Government to State and Union Territory
Governments.This document also shows the revenue deficit, the gross
primary deficit and the gross
fiscal deficit of the Central Government.
The excess of Government's revenue expenditure over revenue receipts
constitutes revenue deficit of Government. Government mainly borrows through
issue of dated securities, i.e. market borrowings. Apart from this,
Government also borrows funds under many schemes which form part of capital
receipts. The difference between the total expenditure of Government by way
of revenue, capital and loans net of repayments on the one hand and revenue
receipts of Government and capital receipts which are not in the nature of
borrowing but which finally accrue to Government on the other, constitutes
gross fiscal deficit. Gross primary deficit is measured by gross fiscal
deficit reduced by gross interest payments. In the Budget documents 'gross
fiscal deficit' and 'gross primary deficit' have been referred to in
abbreviated form 'fiscal deficit' and 'primary deficit', respectively. This
document also shows liabilities of the Government on account of securities
(bonds) issued in lieu of oil and fertilizer subsidies.
(ii)The
document also includes a statement indicating the quantum and nature (share
in Central Taxes, grants/loan) of the total Resources transferred to States
and Union Territory Governments. Details of these transfers by way of share
of taxes, grants-in-aid and loans are given in Expenditure Budget Volume.1.
Bulk of grants and loans are disbursed by the
Ministry of Finance
and are included in the Demand 'Transfers to State and Union Territory
Governments'. The grants and loans released to States and Union Territories
by other Ministries/Departments are provided for in their respective
Demands.
4. (M)
Highlights of Budget
This document explains the key features of the Budget 2009-10, inter alia,
indicating the prominent achievements in various sectors of the economy. It
also explains, in brief, the budget proposals for allocation of funds to be
made in important areas. The summary of tax proposals is also reflected in
the document.
4. (N)
Status of Implementation of Announcements made in Finance Minister's Budget
Speech 2008-09
This document indicates the action taken and action in progress on the
announcements made in the last budget. The position as of January 2009 is
reflected in this document.
4. (O)
Detailed Demands for Grants
The Detailed Demands for Grants are laid on the table of the Lok Sabha
sometime after the presentation of the Budget, but before the discussion on
Demands for Grants commences. Detailed Demands for Grants further elaborate
the provisions included in the Demands for Grants as also actual expenditure
during the previous year. A break-up of the estimates relating to each
programme/organisation, wherever the amount involved is not less than Rs.10
lakhs, is given under a number of object heads which indicate the categories
and nature of expenditure incurred on that programme, like salaries, wages,
travel expenses, machinery and equipment, grants-in-aid, etc. At the end of
these Detailed Demands are shown the details of recoveries taken in
reduction of expenditure in the accounts.
4. (P) Outcome
Budget
( With effect from Financial Year 2007-08, the Performance Budget and the
Outcome Budget hitherto presented to
Parliament
separately by Ministries/Departments, are merged and presented as a single
document titled "Outcome Budget" by each Ministry/Department in respect of
all Demands/Appropriations controlled by them, except those exempted from
this requirement. Outcome Budget broadly indicates physical dimensions of
the financial budget of a Ministry/Department, indicating actual physical
performance in the preceding year (2007-2008), performance in the first nine
months (up to December) of the current year (2008-2009) and the targeted
performance during the ensuing year (2009-2010).
(ii)
Outcome Budget contains a brief introductory note on the organization and
function of the Ministry/Department, list of major programmes/schemes
implemented by the Ministry/Department, its mandate, goal and policy
framework, budget estimates, scheme-wise analysis of physical performance
and linkage between financial outlays and outcome, review covering overall
trends in expenditure vis-a-vis budget estimates in recent years, review of
performance of statutory and autonomous bodies under the administrative
control of the Ministry/Department, reform measures, targets and
achievements and plan for future refinements.
(iii)
As far as feasible, coverage of women and SC/ST beneficiaries under various
developmental schemes and schemes for the benefit of North Eastern Region
are also separately indicated.
4. (Q)
AnnuAnnual
Reports
A descriptive account of the activities of each Ministry/Department during
the year 2008-2009 is given in the document Annual Report which is brought
out separately by each Ministry/Department and circulated to Members of
Parliament at the time of discussion on the Demands for Grants.
4. (R) Economic Survey
The Economic Survey brings out the economic trends in the country, which
facilitates a better appreciation of the mobilisation of resources and their
allocation in the Budget. The Survey analyses the trends in agricultural and
industrial production, infrastructure, employment, money supply, prices,
imports, exports, foreign exchange reserves and other relevant economic
factors which have a bearing on the Budget, and is presented to the
Parliament ahead of the Budget for the ensuing year.
The Budget of the Central Government is not merely a statement of receipts
and expenditure. Since Independence, with the launching of Five Year Plans,
it has also become a significant statement of governmental policy. The
Budget reflects and shapes, and is, in turn, shaped by the country's
economic life. For a better appreciation of the impact of governmental
receipts and expenditure on the other sectors of the economy, it is
necessary to group them in terms of economic magnitudes, for example, how
much is set aside for capital formation, how much is spent directly by the
Government and how much is transferred by Government to other sectors of the
economy by way of grants, loans, etc. nt>This analysis is contained in
the document Economic and Functional
Classification of the Central Government Budget
which is brought out by the Ministry of Finance separately.
|
INDEX |
Topics
|
Paragraph Number
|
Accounting classification
|
4(A)(vi)
|
Annual Financial Statement
|
4(A),4(A)(iv),(vi),4(B)(i),4(D),4(I)(ii),
(v),(vi),4(K)
|
Annual Report
|
2,4(I)(iv),4(Q)
|
Appropriation
|
4(B)(ii),4(P)
|
Appropriation Bill
|
4(C)
|
Appropriation (Vote on Account) Bill
|
4(C)
|
Budget at a Glance
|
4(L)
|
Budget/Budget of the Central Government
|
4(R)
|
Capital Budget
|
4(A),4(A)(v)
|
Charged Expenditure
|
4(B)(i)
|
Consolidated Fund
|
4(A),4(A)(i)(ii)(iii)(vi),4(B)(i)(ii),4(C)
|
Contingency Fund
|
4(A),4(A)(ii)
|
Defence Services Estimates
|
4(I)(vi)
|
Demands for Grants
|
4(A)(vi),4(B)(i),4(C),4(I)(ii),
(iii),(v),4(J),4(O),4(Q)
|
Detailed Demands for Grants
|
2,4(I)(vi),(vii),4(O)
|
| |
|
Economic Survey
|
2,4(R)
|
Expenditure Budget
|
4(I),(ii)(iii)(iv)(vii), 4(J),4(L)(ii)
|
External Assistance
|
4(K)
|
Extra Budgetary Resources
|
4(I)((iv)
|
Finance Bill
|
4(A)(iv),4(D),4(E)
|
Fiscal Deficit
|
4(H),4(L)(i)
|
Fiscal Policy Strategy Statement
|
4(G)
|
Grants-in-aid
|
4(I)(vii)
|
Guarantees given by the Central Government
|
4(K)
|
International Bodies - Contribution to Market Loans
|
4(I)((ii)
|
Macro-economic Framework Statement
|
4(F)
|
Medium-term Fiscal Policy Statement
|
4(H)
|
Memorandum Explaining the Provisions in the Finance Bill
|
4(D),4(E)
|
New Service
|
4(B)(i)
|
Outcome Budget
|
2,4(I)(iii),4(P)(i)(ii)
|
Plan Outlay
|
4(I)(iii),4(L)(i)
|
Public Account
|
4(A),4(A)(iii),(v)
|
Public Enterprises Survey
|
4(I)(iv)
|
Public Sector Enterprises
|
4(I)(iv)
|
Railways
|
4(I)(v)
|
Receipts Budget
|
4(I)(v),4(K)
|
Resources transferred to States/Union Territories
|
4(L)(i)(ii)
|
Revenue Budget
|
4(A)(iv)
|
Revenue Deficit
|
4(H),4(L)(i)
|
Statement of Action Taken on Budget Announcements
|
4(N)
|
Strength of Establishment of Govt Deptts
|
4(I)(ii)
|
Summary of Demands for Grants
|
4(B)(i)
|
Treasury Bills
|
4(A)(v)
|
Vote on Account
|
4(C)
|