1. INTRODUCTION TO BUDGET

2. LEARNING OBJECTIVES Constitutional mandate
Process of Budgetary Control
Budget Documents
FRBM Act

3. Constitutional Mandate
(i) Article 112
(ii) Article 113
(iii) Article 114
(iv) Article 115
(v) Article 116

4. Article 112 Annual Financial Statement -President
-Every financial year (1st April to 31st March)
-Both Houses of Parliament
-Statement of estimated receipts and Expenditure of GOI
What estimate of expenditure consists of:--
Charged and Voted Expenditure
Revenue and Capital Expenditure

5. Article 112 (contd.) What are Charged Expenditure?
-Emoluments and allowances of President and his office
Salaries and allowances of Chairman/Deputy Chairman,
Speaker/Deputy Speaker
Interest payment
Salaries, allowances and pensions of Judges of Supreme Court
Pensions payable to Judges of High Court
Administrative expenses of the office of CAG, including
salaries,Allowances and pension payable to CAG

6. Revenue Expenditure
Expenditure for normal running of Government dept. and various services
Interest Charges on Debt, Subsidies
Does not result in creation of asset
All grants given to State Governments even though some of which may be for asset creation

7. Capital Expenditure
-Expenditure on acquisition of assets like land, buildings, machinery, equipment, investment in shares
-Loans and advances granted by Central Government to State and Union Territory
-Expenditure on concrete asset of a material and permanent character

8. Article 113 Procedure in Parliament with respect to Estimates
Charged Expenditures:--
-Shall not be submitted to vote of Parliament
-Nothing prevents discussion of estimates in either House
Voted Expenditures:--
-Submitted in the form of Demands for Grants to Lok Sabha
-LS have power to assent, refuse, reduce the amount
- No demand except on recommendation of President

9. Article 114 Appropriation Bills
Bill for appropriation out of CFI moneys required to meet voted grants and expenditure charged on CFI
No amendment either varying the amount or altering destination once the bill is passed.
No money shall be drawn from CFI except appropriation made by law passed in accordance with provisions of this article

10. Article 115 Supplementary, additional, excess grants
-If the amount for a particular service is insufficient
-Additional expenditure on a new service not contemplated
-Money spent in excess of amount granted for that service

11. Article 116 Votes on account, votes of credit and exceptional grant
An advance in respect of estimated expenditure
For a part of any financial year
Pending the completion of procedure prescribed in Article 113 and 114.
Votes of credit:--
-Meet unexpected demand on account of magnitude or indefinite character which cannot be given in AFS.
Exceptional grant:--
-Exceptional grant which forms no part of the current service of any financial year.

12. Process of Budgetary Control
(i) Preparation
(ii) Enactment
(iii) Execution
(iv) Parliamentary Control
Exercise No. 1

13. Preparation Submission of estimates by estimating auth.
Scrutiny of estimates of HOD
Consolidation of grants for all Min. by FD

14. Budget Documents (i) Budget speech – Finance Minister
(ii) Annual Financial Statement
(iii) Receipt Budget
(iv) Expenditure Budget
(v) Demands for Grants
(vi) Detailed Demands for Grant
(vii) Finance Bill
(viii) Appropriation Bill
(ix) Budget at a Glance

15. Annual Financial Statement
AFS
Statements
CFI
CoFI PA
Rev
Cap
Rec.
Dis.
Rec.
Dis.
Charged
Voted

16. AFS (Contd.) Major Head Actuals 2009-10 BE 2010-11 RE 2011-12
What the Statements consist of?
Amount (in crore Rupees)
Major Head
Actuals BE RE
Parliament
Elections
Audit

17. Receipt Budget
Details of Revenue and Capital receipts with explanations
Trend of receipts over years
Details of external assistance
Eg. :-- Corporation Tax:--
(a) Ordinary collection
(b) Advance tax collection
(c) Surcharge
(d) Miscellaneous receipts

18. Expenditure Budget Expenditure Budget Volume-I:--
-Revenue and Capital disbursement of Ministries
Gives break up of Plan and Non-Plan exp.
Analysis of various types of expenditure
Expenditure Budget Volume-II:--
-Provisions for a scheme or programme
- Break up of Plan and Non Plan exp.

19. Demands for Grants In pursuance of article 113
One demand for grant in respect of each Ministry or Department. Large Min. more than one demand
Provisions on account of Revenue and Capital, Charged and Voted, Plan and Non Plan

20. Detailed Demands for Grants
Tabled after presentation of budget before discussion of demands for grants commences
Details of provisions
Break up of estimates of programmes under number of objects of expenditure like salaries, wages, etc.

21. Finance Bill Proposal for levy of :-- New taxes
Modification of existing tax structure
Continuance of the existing tax structure

22. Appropriation Bill In pursuance of Article 114
Withdrawal from Consolidated Fund amounts voted and amounts required to meet charged expenditure

23. Budget at a Glance In brief:-- Receipts and Disbursements
Broad break up of Plan and Non Plan allocations
Revenue Deficit, Fiscal Deficit, Primary Deficit

24. Fiscal Responsibility and Budget Management Act
What is FRBM Act?
FRBM Act was enacted by Parliament in 2003 to bring fiscal discipline.
FRBM rules framed in July 2004
How will it help in redeeming the fiscal situation?
FRBM rules impose limits on Fiscal and revenue deficit
Revenue Deficit should be reduced to nil in five years beginning Each year reduce by 0.5% of GDP.
Fiscal Deficit to be reduced to 3% of GDP by Reduction of fiscal deficit by 0.3% of GDP every year.

25. Fiscal Responsibility and Budget Management Act
How are these targets monitored?
Rules have mid-year targets for fiscal and revenue deficits
Govt. to restrict fiscal and revenue deficit to 45% of budget estimates at the end of September.
In case of breach FM will be required to explain to Parliament the reasons for the same.