As finance minister Pranab Mukherjee gets ready to present the much anticipated budget

for financial year (FY) 20 0! on February 2"# here is $hat you ought to kno$ about the %nion budget& 't $ill help you understand and analyse the budget& What does the Union Budget contain? (he %nion )udget is our country*s annual financial statement of receipts and e+penditures for the coming financial year !! similar to an indi,idual*s personal cash flo$ statement but prepared on an annual basis& 't contains the e+pected re,enues (to be recei,ed) and e+pected e+penditures (to be met) in the coming FY by the -o,ernment of 'ndia& 't is supposed to be an indicator of the economic gro$th and the financial $ell being of our country& When is the Union Budget presented? (he presentation of the %nion )udget is usually done on the last $orking day of February& (his year# ho$e,er# it $ill be presented on February 2" as the last $orking day falls on a .unday& (he current budget being presented is for the coming financial year/ FY 20 0! & Who prepares Government's annual budget? (here*s a separate di,ision in the Ministry of Finance called as the *)udget 0i,ision* to look after the preparation of the )udget& Budget process 1ere are the ,arious stages through $hich the %nion )udget goes through before it is passed in the lo$er house of Parliament (2ok .abha) after $hich the President of 'ndia signs it and it becomes an Act/

3,ery year# the *)udget 0i,ision* under the Ministry of Finance is responsible for the preparation of the budget& All go,ernment ministries 4 departments send in their funds* proposals and re5uirements )ased on the inputs# a 0raft )udget is prepared (he draft budget is then appro,ed by the Finance Minister in consultation $ith the Prime Minister A final budget is then presented in the Parliament A discussion on the budget is held in the Parliament (regarding each ministry*s grant proposals) and Finance Minister responds to 5uestions& 6e,ision of ta+ (direct 4 indirect) proposals are also discussed 4 ,oted upon here 7nce the grants are appro,ed# 2 bills are introduced in the 2ok .abha !! Appropriation )ill (final appro,al of funds to be gi,en to each ministry) and Finance )ill (ta+ proposals)& %nion )udget is then appro,e

)udget terms you should kno$

1. Budget estimate

(he )udget estimate is an assessment of the -o,ernment*s re,enues and e+penses for the coming FY& (he go,ernment makes an assessment of the e+penditure to be incurred and re,enue (or income) to be recei,ed& 2. Central plan/Annual plan (he go,ernment*s Fi,e!Year plans are split into 8entral Plans or Annual Plans and necessary funds are allocated e,ery year through the %nion )udget to achie,e the laid! out goals (social 4 $elfare commitments)& . Consolidated !und o" #ndia (his is the go,ernment*s sa,ings account& All money recei,ed by go,ernment (in any form) is placed here& All e+penses are met from this account& 9ithdra$al is subject to Parliament*s authorisation& $. %ublic account 't is an account $here money recei,ed through transactions not relating to consolidated fund is kept& &. Contingenc' !und o" #ndia As the name suggests# money from this account is only for contingencies (such as floods# drought# other national calamities# disasters etc)& 9ithdra$al is subject to Parliament*s authorisation& (. )evenue account (his is the income 4 e+penditure statement of the go,ernment containing details of re,enue spent in comparison $ith re,enue recei,ed& 6e,enue receipts/ (he go,ernment earns re,enue in the form of ta+es (direct and indirect ta+es)# duties (e+cise# custom)# interest# and other fees collected& 6e,enue e+penditure/ Any e+penditure (other than for creation of capital asset) for the normal operation of the go,ernment is called re,enue e+penditure& 3+ample# interest payments on go,ernment borro$ing programme# salaries to go,ernment staff# subsidies etc& (he abo,e e+penditure must be financed from re,enue receipts# ie re,enue that the go,ernment earns& *. Capital account Alike 6e,enue Account# 8apital Account is the statement containing details of capital e+penditure incurred ,is!a!,is capital receipts&

8apital receipts/ (hye refer to the money that the go,ernment make ,ia loans !! gi,en to 6)'# market ad,ances# to foreign go,ernments and other international organisations& Also# disin,estment proceeds fall into this category& 8apital e+penditure/ 6efers to the money used up on creating capital assets (rail$ays# e+press high$ays# air$ays# canals and dams# purchase of land# machinery and e5uipment)# loans to state go,ernments 4 go,ernment subsidiaries# and other in,estments made:incurred by the go,ernment& +. ,on-%lan e.penditure (his consists of go,ernment*s fi+ed e+penditure like e+penditure on defense# interest payments# subsidies and grants to states& (his can be both re,enue 4 capital in nature& /. %lan e.penditure (his consists of e+penditure incurred on fi,e!year plans and social and $elfare commitments of the go,ernment (e+ample# e+penditure incurred on ;ational 6ural 3mployment -uarantee .cheme)& Funds are allocated for this periodically& 10. !iscal de"icit 9hen the re,enue receipts of the go,ernment falls short of its total e+penditure# a fiscal deficit is created& 'n such a case# the -o,ernment resorts to borro$ing to make good this shortfall& 11. !inance Bill (his consists of the proposed amendments to ta+es (e+ample# change in income ta+ slabs etc) and their impact on the -o,ernment*s re,enue resources& 12. 1irect and indirect ta.es 0irect (a+es/ (a+es cut directly from salary# business income or income from other sources are called direct ta+es& 'ndirect (a+es/ (a+es added (indirectly) to the price of goods and ser,ices are called indirect ta+es& 3+ample/ sales ta+# e+cise duty and ser,ice ta+& 1 . 2ubsidies Monetary concession gi,en to producers or consumers of specific goods in order to control prices and manage resources for better utilisation&