Key to Budget Documents BUDGET 2019-2020
The list of Budget documents presented to the Parliament, besides the Finance Minister’s Budget Speech, is given below:
A. Annual Financial Statement (AFS), Art. 112
B. Demands for Grants (DG), Art. 113
C. Finance Bill, Art 110(a)
D. Statements mandated under FRBM Act (Fiscal Responsibility and Budget Management Act,2003):
i. Macro-Economic Framework Statement
ii. Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement
E. Expenditure Budget
F. Receipt Budget
G. Expenditure Profile
H. Budget at a Glance
Other documents are explanatory statements supporting the mandated documents with narrative in a user-friendly format suited for quick or contextual references.
A. Annual Financial Statement (AFS)
1. the estimated receipts and expenditure of the Government of India for 2019-20 in relation to estimates for 2018-19 as also actual expenditure for the year 2017-18.
2. The receipts and disbursements are shown under three parts in which Government Accounts are kept viz
a. The Consolidated Fund of India,
b. The Contingency Fund of India and
c. The Public Account of India.
3. Revenue and Capital sections together make the Union Budget.
4. The significance of the Consolidated Fund, the Contingency Fund and the Public Account, as well as the distinguishing features of the Revenue and the Capital portions, are given below briefly:
a. The Consolidated Fund of India
(i) Article 266 of the Constitution.
(ii) All revenues received by the Government, loans raised by it, and receipts from recoveries of loans granted by it, together form the Consolidated Fund of India.
(iii) All expenditure of the Government is incurred from the Consolidated Fund of India and
(iv) No amount can be drawn from the Consolidated Fund without due authorization from the Parliament.
b. Contingency Fund of India
(i) Article 267
(ii) placed at the disposal of the President of India to facilitate meeting of urgent unforeseen expenditure by the Government pending authorization from the Parliament.
(iii) Parliamentary approval for such unforeseen expenditure is obtained, ex- post-facto, and an equivalent amount is drawn from the Consolidated Fund to recoup the Contingency Fund after such ex-post-facto approval.
(iv) The corpus of the Contingency Fund as authorized by Parliament presently stands at 500 crores.
c. Public Account of India
(i) Moneys held by Government in trust
(ii) Article 266
(iii) Provident Funds, Small Savings collections, income of Government set apart for expenditure on specific objects such as road development, primary education, other Reserve/Special Funds etc., are examples of moneys kept in the Public Account.
(iv) Public Account funds that do not belong to the Government and must be finally paid back to the persons and authorities who deposited them,
(v) do not require Parliamentary authorisation for withdrawals.
(vi) The approval of the parliament is obtained when amounts are withdrawn from the Consolidated Fund and kept in the Public Account for expenditure on specific objects.
(vii) The actual expenditure on the specific object is again submitted for vote of the Parliament for withdrawal from the Public Account for incurring expenditure on the specific objects.
5. The Revenue Budget consists of the revenue receipts of the Government (Tax revenues and other Non Tax revenues) and the expenditure met from these revenues.
a. Tax revenues comprise proceeds of taxes and other duties levied by the Union.
b. The estimates of revenue receipts shown in the Annual Financial Statement consider the effect of various taxation proposals made in the Finance Bill.
c. Other non-tax receipts of the Government mainly consist of interest and dividend on investments made by the Government, fees and other receipts for services rendered by the Government.
d. Revenue expenditure is for the normal running of Government departments and for rendering of various services, making interest payments on debt, meeting subsidies, grants in aid, etc.
e. Broadly, the expenditure which does not result in creation of assets for the Government of India, is treated as revenue expenditure.
f. All grants given to the 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 capital assets.
6. Capital receipts and capital payments together constitute the Capital Budget.
a. The capital receipts are
(i) loans raised by the Government from the public (these are termed as market loans),
(ii) borrowings by the Government from the Reserve Bank of India and other parties through the sale of Treasury Bills,
(iii) the loans received from foreign Governments and bodies,
(iv) disinvestment receipts and recoveries of loans from State and Union Territory Governments and other parties.
b. Capital payments consist of
(i) capital expenditure on acquisition of assets like land, buildings, machinery, equipment,
(ii) investments in shares etc. and
(iii) loans and advances granted by Central Government to State and Union Territory Governments, Government companies, Corporations and other parties.
7. Accounting Classification
a. 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 referred to under Article 150 of the Constitution.
b. The Annual Financial Statement shows, certain disbursements distinctly, which are charged on the Consolidated Fund of India.
(i) Emoluments of the President,
(ii) 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,
(iii) salaries, allowances and pensions of the Judges of the Supreme Court, the Comptroller and Auditor-General of India and the Central Vigilance Commission,
(iv) interest on and repayment of loans raised by the Government and payments made to satisfy decrees of courts etc.,
(v) are not required to be voted by the Lok Sabha.
B. Demands for Grants
1. Article 113 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, be submitted in the form of Demands for Grants.
2. The Demands for Grants are presented to the Lok Sabha along with the Annual Financial Statement.
3. Generally, one Demand for Grant is presented in respect of each Ministry or Department.
4. However, more than one Demand may be presented for a Ministry or Department depending on the nature of expenditure.
5. Regarding Union Territories without Legislature, a separate Demand is presented for each of such Union Territories.
6. In budget 2018-19 there are 99 Demands for Grants.
7. Each Demand initially gives separately the totals of
a. ‘voted’ and ‘charged’ expenditure;
b. the ‘revenue’ and the ‘capital’ expenditure and
c. the grand total on gross basis of the amount of expenditure for which the Demand is presented.
d. This is followed by the estimates of expenditure under different major heads of account.
e. The amounts of recoveries are also shown. The net amount of expenditure after reducing the recoveries from the gross amount is also shown.
f. 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.
8. 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 loans and advances relating to the service.
C. Finance Bill
1. At the time of presentation of the Annual Financial Statement before the 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.
2. It also contains other provisions relating to Budget that could be classified as Money Bill.
3. A Finance Bill is a Money Bill as defined in Article 110 of the Constitution.
D. Statements mandated under the FRBM Act.
Macro-Economic Framework Statement
1. The Macro-economic Framework Statement is presented to Parliament under Section 3 of the Fiscal Responsibility and Budget Management Act, 2003 and the rules made thereunder.
2. It contains an assessment of the growth prospects of the economy along with the statement of specific underlying assumptions.
3. It also contains an assessment regarding
a. GDP growth rate,
b. Domestic economy and stability of external sector of economy,
c. Fiscal balance of Central Government and External sector balance of economy.
Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement
1. The Medium-Term Fiscal Policy Statement cum Fiscal Policy Strategy Statement is presented to Parliament under Section 3 of the Fiscal Responsibility and Budget Management Act, 2003.
2. It sets out the three-year rolling targets for six specific fiscal indicators in relation to GDP at market prices, namely
a. Fiscal Deficit,
b. Revenue Deficit,
c. Primary Deficit
d. Tax Revenue
e. Non-tax Revenue
f. Central Government Debt.
3. The Statement includes the underlying assumptions,
a. an assessment of the balance between revenue receipts and revenue expenditure and the use of capital receipts including market borrowings for the creation of productive assets.
b. It also outlines for the existing financial year, the strategic priorities of the Government relating to taxation, expenditure, lending and investments, administered pricing, borrowings and guarantees.
c. The Statement explains how the current fiscal policies are in conformity with sound fiscal management principles and gives the rationale for any major deviation in key fiscal measures.
E. Expenditure Budget
1. The provisions made for a scheme or a programme may be spread over a number of Major Heads in the Revenue and Capital sections in a Demand for Grants.
2. In the Expenditure Budget, the estimates made for a scheme/programme are brought together and shown on a net basis on Revenue and Capital basis at one place.
3. To understand the objectives underlying the expenditure proposed for various schemes and programmes in the Expenditure Budget, suitable explanatory notes are included in this volume.
F. Receipt Budget
1. Estimates of receipts included in the Annual Financial Statement are further analyzed in the document “Receipt Budget”.
2. The document provides
a. details of tax and non-tax revenue receipts and capital receipts and explains the estimates.
b. provides a statement on the arrears of tax revenues and non-tax revenues, as mandated under the Fiscal Responsibility and Budget Management Rules, 2004.
c. Trend of receipts and expenditure along with deficit indicators,
d. Statement pertaining to National Small Savings Fund (NSSF),
e. Statement of Liabilities,
f. Statement of Guarantees given by the government,
g. Statements of Assets and
h. Details of External Assistance are also included in Receipts Budget.
i. Statement of Revenue Impact of Tax Incentives under the Central Tax System which seeks to list the revenue impact of tax incentives that are proposed by the Central Government.
j. Liabilities of the Government on account of securities (bonds) issued in lieu of oil and fertilizer subsidies in the past. This was earlier called ‘Statement of Revenue Foregone’ and brought out as a separate statement in 2015-16. This has been merged in the Receipts Budget from 2016-17 onwards.
G. Expenditure Profile
1. This document was earlier titled Expenditure Budget – Vol-I. It has been recast in line with the decision on Plan-Non plan merger. It gives an aggregation of various types of expenditure and certain other items across demands.
2. Under the present accounting and budgetary procedures, certain classes of receipts, such as 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.
3. While the estimates of expenditure included in the Demands for Grants are for the gross amounts, the estimates of expenditure included in the Annual Financial Statement are for the net expenditure, after considering the recoveries.
4. The document, makes certain other refinements such as netting expenditure of related receipts so that overstatement of receipts and expenditure figures is avoided.
5. The document contains statements indicating major variations between BE 2018-19 and RE 2018-19 as well as between RE 2018-19 and BE 2019-20 with brief reasons. Contributions to International bodies and estimated strength of establishment of various Government Departments and provision thereof are shown in separate Statements.
6. A statement each, showing
a. Gender Budgeting
b. Schemes for Development of Scheduled Castes and Scheduled Tribes including Scheduled Caste Sub Scheme (SCSS) and Tribal Sub Scheme (TSS) allocations
c. Schemes for the Welfare of Children are also included in this document.
7. It also has statements on
a. expenditure details and budget estimates regarding Autonomous Bodies.
b. the details of certain important funds in the Public Account.
8. Scheme Expenditure
a. Scheme expenditure forms a sizeable proportion of the total expenditure of the Central Government.
b. The Demands for Grants of the various Ministries show the Scheme expenditure under the two categories of Centrally Sponsored Schemes and Central Sector Schemes separately.
c. The Expenditure Profile also gives total provisions for each of the Ministries arranged under the various categories-
i. Centrally Sponsored Schemes,
ii. Central Sector Schemes,
iv. Other Central Expenditure,
v. Transfer to States etc.
d. highlights the budget provisions for certain important programmes and schemes.
e. Statements showing externally aided projects are also included in the document.
9. Public Sector Enterprises
a. 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.
b. A report on the working of the enterprises under the control of various administrative Ministries is also given in the Annual Reports of the various Ministries circulated to the Members of Parliament separately.
c. The annual reports along with the audited accounts of each of the Government companies are also separately laid before the Parliament.
d. Besides, the reports of the Comptroller and Auditor General of India on the working of various public sector enterprises, are also laid before Parliament.
10. Commercial Departments
a. Railways is the principal departmentally-run commercial undertaking of Government.
b. The Budget of the Ministry of Railways and the Demands for Grants relating to Railway expenditure are presented to the Parliament together with the Union Budget from the financial year 2017-18 onwards.
c. The Expenditure Profile has a separate section on Railways to capture all the salient aspects of the demand for grants of Railways and other details of interest regarding Railways.
d. The total receipts and expenditure of the Railways are, incorporated in the Annual Financial Statement of the Government of India.
e. Details of other commercially run departmental under takings are also shown in a statement.
f. Expenditure is depicted in the Expenditure Profile and Expenditure Budget, net of receipts of the Departmental Commercial Undertakings, in order to avoid overstatement of both receipts and expenditure.
11. The receipts and expenditure of the Ministry of Defence Demands shown in the Annual Financial Statement, are explained in greater detail in the document Defence Services Estimates presented with the Detailed Demands for Grants of the Ministry of Defence.
12. 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.
H. Budget at a Glance
1. This document shows in brief, receipts and disbursements along with broad details of tax revenues and other receipts.
2. This document provides details of resources transferred by the Central Government to State and Union Territory Governments.
3. This document also shows the Revenue deficit, Gross Primary deficit and Gross Fiscal deficit of the Central Government.
a. The excess of Government’s revenue expenditure over revenue receipts constitutes Revenue Deficit of Government.
b. The difference between total expenditure of Government by way of revenue, capital and loans net of repayments and revenue receipts of Government and capital receipts which are not in the nature of borrowing but which accrue to Government constitutes Gross Fiscal Deficit.
c. Gross primary deficit is gross fiscal deficit reduced by gross interest payments.
4. In Budget documents ‘gross fiscal deficit’ and ‘gross primary deficit’ have been referred to in abbreviated form ‘fiscal deficit’ and ‘primary deficit’, respectively.
5. 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 Profile (Statement No.18). Bulk of grants and loans to States are disbursed by the Ministry of Finance and are included in the Demand
6. ‘Transfers to States’ and in the Demand ‘Transfer to Delhi’ and Transfer to Puducherry’. The grants and loans released to States and Union Territories by other Ministries/ Departments are reflected in their respective Demands.
BUDGET at a glance 2019-2020
1. Budget at a Glance shows receipts and expenditure as well as the Fiscal Deficit (FD), Revenue Deficit (RD), Effective Revenue Deficit (ERD), and the Primary Deficit (PD) of the Government of India.
2. Besides, it presents a pictorial account of
a. sources of receipts,
b. their application,
c. the details of debt and deficit indicators,
d. sources of deficit financing and
e. trends and composition of important budgetary variables through charts and graphs.
3. Fiscal Deficit is the difference between the Revenue Receipts plus Non-debt Capital Receipts (NDCR) and the total expenditure. FD is reflective of the total borrowing requirements of Government.
4. Revenue Deficit refers to the excess of revenue expenditure over revenue receipts.
5. Effective Revenue Deficit is the difference between Revenue Deficit and Grants for Creation of Capital Assets.
6. Primary Deficit is measured as Fiscal Deficit less interest payments.
7. Budget 2019-20 reflects the Government’s firm commitment to substantially boost investment in Agriculture, Social Sector, Education and Health. This is substantiated by increase in expenditure of ` 3,26,965 crores over RE (2018-19) while keeping the fiscal deficit at 3.4% of GDP.
8. In RE 2018-19, the total expenditure has been kept at ` 24,57,235 crore and is more than BE 2018-19 by ` 15,022 crore. The increase in total expenditure is on account of increased support to agricultural sector, interest payments and internal security.
9. The total resources going to States including the devolution of State’s share in taxes, Grants/Loans, and releases under Centrally Sponsored Schemes in BE (2019-20) is `13,70,620 crore, with a jump of `1,24,036 crore over RE (2018-19) and 2,85,492 crore more than the Actuals (2017-18).
10. Actuals for 2017-2018 are provisional.