By Anjuman Ara Begum, TwoCircles.net,
Union budget is an important document as it is the charter of the commitments made by the government to its citizen. The most important document in union budget of India is the document called “Budget at a glance’. The question here is who understands this document? It’s full of jargons and technicalities and in its appearance it’s hardly possible for a common person to understand it and develop an informed opinion about the budget.
A few key terms of the Budget are discussed here to understand what it means.
Budget (originally from French bougette) generally refers to a list of all planned expenses and revenues. Budget reflects itemized summary of probable expenses and income for a given period called fiscal year which is in case of India April 1 to March 31 of the next year. The Union Budget comprises of revenue budget, capital budgets and estimates. Capital represents financial wealth especially that used to start or maintain a business. Capital revenue would mean income of a government from all sources. Capital receipts are a source of cash inflow for the government mainly through borrowings and other liabilities, recovery of loans and proceeds from disinvestments. Figures presented under the heading ‘Actuals’ are the expenses occurred and ‘estimates’ are the probable expenditures going to be occurred.
Revenue represents the income of a government from all sources appropriated for the payment of the public expenses. Revenue receipts and expenditure is the equivalent term for revenue is income for an individual. For government, revenues refer to the gross proceeds received from taxes, fees, and the like. Revenue receipts are classified into tax- revenue and non-tax revenue.
Two other terms are important to understand budget. These are Plan Expenditure & Non-Plan Expenditure. Plan Expenditure refers to government expenditure, which is meant for financing the programmes/schemes framed under the ongoing Five Year Plan or the unfinished programmes/ schemes of the previous Five Year Plans. Non-Plan Expenditure are the expenditures of the government, which are not included under Plan Expenditure, are called Non-Plan Expenditure. It is to be noted that Non-Plan Expenditure should not be understood as unplanned expenditures of the Government. Quite contrary to being unplanned, Non-Plan Expenditures include some of the important types of government expenditure, e.g. Interest Payments, Defence expenditure, Subsidies, and Non-Plan Grants to States & UTs. Besides, a large chunk of government expenditure which is incurred for running of different organs of the state (such as, judiciary, police, administration and so on) is included under Non-Plan Expenditure. Moreover, in several of the sectors like, Education and Health, the entire government expenditure on maintenance of the existing government establishments (including schools and hospitals) and salary of existing government staff (excluding the small proportion of staff hired under Plan programmes/ schemes) is regarded as Non-Plan Expenditure.
Thus, Non-Plan Expenditure of the government is meant for supporting all those government services, which function on a regular basis irrespective of the Five Year Plans. Whereas, Plan Expenditure of the government is meant for covering the entire costs, i.e. salaries of new staff hired as well as construction of buildings and procurements, under the interventions envisaged under Five Year Plans.
Also it is to be understood that the budget is made only on the Consolidated fund of India which is constituted under Article 266 (1) of the Constitution of India. All revenues received, loans raised and all moneys received by the Government in repayment of loans are credited to the Consolidated Fund of India and all expenditures of the Government are incurred from this fund. Money can be spent through this fund only if appropriated by the Parliament. The consolidated Fund has further been divided into ‘Revenue’ and ‘Capital’ divisions.
Two other funds are also relevant for budget. These are the Contingency fund of India and the Public Account. The Contingency Fund is set by the Government of India under Article 267 of the Constitution. This Contingency Fund enables the Government to meet unforeseen expenditure, which cannot wait approval of the Parliament. For meeting such exigencies, advances are made to the executive from the Contingency Fund that is subsequently reported to the Parliament for recoupment from the Consolidated Fund of India. The Public Account is constituted under Article 266 (2) of the Constitution. Money received, other than those categories mentioned in consolidated fund of India, by or on behalf of Government is credited to the Public Account. The receipts under Public Account do not constitute normal receipts of Government. Parliamentary authorization for payments from the Public Account is therefore not required.
(With help from the Centre for Budget and Governance Accountability’s publication “A Primer to Understanding the Public Budget”, New Delhi, 2008)