RYAN INTERNATIONAL SCHOOL, SANPADA

ECONOMICS PROJECT

FOR ACADEMIC YEAR 2020-21

SUBMITTED BY-

ADITI MAHALE
XII-C
 CERTIFICATE

This is to certify that the content of this Economics project

by Ms Aditi Suyog Mahale is the bonafide work of him
submitted to Ryan International School, Sanpada.
The original work was carried out by her under my
supervision in the academic year 2020-21. On the basis of
the declaration made by her, I recommend this project for
evaluation.

Signature of teacher in charge

Signature of Principal

School Stamp

Signature of External
 written
ACKNOWLEDGEMENT

I wish to express my deep gratitude and sincere thanks to

our respected Sir A.F. Pinto, Principal ma’am Muriel
Fernandes, Ryan International School, Sanpada for
encouragement and for all the facilities they have provided
for this project.

I wish to extend my heartily thanks to Mrs Shahida Khan,

Economics teacher, who guided me for the successful
completion of this project.

I can’t forget to offer my sincere thanks to my parents who

helped to carry out this project successfully and for their
valuable advice and support which I have received from
time to time.
 INDEX

Sr Title
no.
1 Introduction
2 Components of Government Budget
3 How to classify various items?
4 Types of Budget
5 Types of Union Budget
6 Measures of Government Budget
7 Process of Government Budget
8 Union Budget estimated for 2020-21
9 Budget Analysis
10 Criticism about Government Budget
11 Fiscal Policy
12 Bibliography
 Project Selected-:

GOVERNMENT BUDGET AND ITS COMPONENTS

 INTRODUCTION
In the modern world, every government aims at maximising the
welfare of its country. It requires a number of infrastructural,
economic and welfare activities. This requires appropriate planning
and policy of the Government. The solution to all these problems is
‘Budget’.

A budget is an estimation of revenue and expenses over a specified

future period of time and is usually compiled and re-evaluated on a
periodic basis.

A Government Budget is a government document presenting the

government's proposed revenues and spending for a financial year
that is often passed by the Legislature, approved by the Chief
Executive or President and presented by the Finance Minister to the
nation.
The budget is also known as the Annual Financial Statement of the
country.

The budget is prepared by Government at all levels. Estimates of

expenditure and receipts are planned as per objectives of
government.

The budget reveals the financial performance of the government in

the last year and financial policies for the coming fiscal year.

OBJECTIVES OF GOVERNMENT BUDGET:

1. Reallocation of Resources – Through a budget, the
government endeavours to equally allocate resources and
wealth. Government gives concession, and subsidies to
producers to encourage investment in small industries like
Khadi. Government can levy hefty taxes on production of
harmful products, like cigarettes and alcohol.
2. Redistribution of Income – Government aims to influence
distribution of income by imposing taxes on the rich and
spending more on the welfare of poor people. It will reduce
income of the rich and raise the standard of living of poor,
thus, reducing income inequalities.
3. Economic Stability – Economic stability means absence of
large-scale fluctuation in prices. Government can exercise
control over these fluctuations through taxes and
expenditures. Budget keenly focuses on lowering the price
fluctuations in the market.
4. Financing Public Enterprises – Several public sector
enterprises are established by the government for the social
welfare of the public. Budget is prepared with the objective
of making various provisions for managing these enterprises
and providing them financial help.
5. Economic growth – Economic growth implies a sustainable
increase in the real GDP of an economy. Budget can be an
effective tool to ensure economic growth in a country.
Government makes provisions to boost the rate of savings
and investment made within the economy.
6. Addressing regional disparities – The government budget
aims to reduce regional disparities through its taxation and
expenditure policy for encouraging setting up of production
units in economically backward regions. It aims to alleviate
social disproportion.

IMPORTANCE OF GOVERNMENT BUDGET:

1. Proper resource pool allocation - When it comes to
budgeting, identifying areas of weakness helps the
government to allocate resources in a useful and
sustainable manner. This is one of the most fundamental
objectives behind framing a government budget.

2. Ensuring economic growth - A budget allows the

government to regulate the imposition of taxes in various
sectors. Investment and expenditure are some of the
most prominent factors contributing to the growth of a
nation’s economy.

3. Growth of business and trading – Businesses and

enterprises look forward to the government budget as
resources being allocated to various sectors are revealed.
The government can encourage business owners to revise
their policies accordingly and contribute to the country’s
economic prosperity.

4. Mitigating economic divide – Economic disparity and

inequality is an imminent threat to any country’s
economy. The government can address these kinds of
threats by introducing public and economic welfare
policies for the underprivileged sections of the society
through the budget.

5. Administering operations of PSUs – Industries operating

in the public sector contribute immensely to the country’s
economy by providing employment to a lot of people and
generating revenues. A budget helps the government
focus appropriately on PSUs by introducing policies to aid
their growth.

COMPONENTS OF GOVERNMENT BUDGET

Components of budget refers to the structure of the budget. There
are 2 mains components of budget.
 Revenue budget
 Capital budget

1. Revenue Budget: It deals with the revenue aspect of the

government budget. It explains how revenue is generated
and how it is allocated among various expenditure heads.
It has 2 parts,
(i) Revenue receipts
(ii) Revenue expenditures

2. Capital Budget: It deals with the capital aspect of the

government budget.
It has 2 parts,
(i) Capital receipts
(ii) Capital expenditures

The components of budget can also be categorised according to

receipts and expenditures.
On this basis, 2 broad components are:
 Budget Receipts
 Budget Expenditures
 BUDGET RECEIPTS
Budget receipts refers to the estimated money receipts of the
government from all the sources during a given fiscal year. It is an
extensive list of income generated from different sources by the
government in a given financial year. 
It showcases the break-up of revenue generated under different
heads.

Budget receipts can be further divided into 2 parts:

 Revenue Receipts
 Capital Receipts

There are two parts to the Receipt Budget. While Part A carries
information about the Receipts, Part B has the detailed Asset and
Liability statements.

Revenue receipts have 2 sources. They are,

(i) Tax revenue
(ii) Non-tax revenue

Capital receipts have 3 sources. They are,

(i) Borrowings
(ii) Recovery of loans
(iii) Other receipts
 REVENUE RECEIPTS
Revenue receipts refer to those receipts which neither creates any
liability nor cause any reduction in the assets of the government.
They are regular and recurring in nature, and the Government
receives them in its normal course of activities.

Conditions to be satisfied:
1. Must not create a liability for the government. For
example, taxes levied by the government is revenue
receipt as they do not create any liability for the
government.
2. Must not cause decrease in assets. For example, receipts
from sale of shares of public enterprise is not a revenue
receipt as it causes a reduction in assets of the
government.

Sources of Revenue Receipts:

Revenue receipts of the government are generally classified under 2
heads:
 Tax Revenue
 Non-tax Revenue

Tax Revenue:
Tax revenue refers to sum total of receipts from taxes and other
duties imposed by the government. It is the income that is gained by
governments through taxation.
Taxation is the primary source of government revenue.

It is the revenue collected from taxes on income and profits, social

security contributions, taxes levied on goods and services, payroll
taxes, taxes on the ownership and transfer of property, and other
taxes.

TAX:
A tax is a compulsory financial charge or some other type of levy
imposed upon a taxpayer (an individual or legal entity) by a
governmental organization in order to fund government spending
and various public expenditures.

There are 2 aspects of taxes:

1. Tax is a compulsory payment – No one can refuse to pay
it.  A failure to pay, along with evasion of or resistance to
taxation, is punishable by law.
2. Taxes are not used for direct benefit – Tax receipts are
spent by the government for common benefit of people in
the country. A tax payer cannot expect that the tax
amount will be used for his direct benefit.

Classification of Tax Revenue:

Tax revenue can further be classified into 2 parts:
  Direct taxes
 Indirect taxes

Direct Taxes:
Direct taxes refer to taxes that are imposed on property and income
of individuals and companies and their burden cannot be shifted to
the other person/entity.
The ‘liability to pay’ the tax (impact) and ‘actual burden’ of the tax
(incidence) lie on the same person.
They directly affect the income level and purchasing power of people
and help to change the level of aggregate demand in the economy.
Examples of direct taxes are Corporate Tax, Income Tax, Death Duty,
Capital Gains, etc.

Indirect Taxes:
Indirect taxes refer to those taxes which can be shifted to another
person/entity. Their monetary burden is ultimately borne by final
users of goods and services, rather than the person on whom the tax
is levied.
They are imposed of goods and services.
The ‘liability to pay’ the tax (impact) and ‘actual burden’ of the tax
(incidence) lie on different persons.
Indirect taxes are compulsory payments. But they can be avoided by
not entering into those transactions, which call for such taxes.
For example, consumers may save taxes by purchasing Khadi Gram
Udyog items as there is not indirect tax on khadi items.
Example of indirect taxes are Goods and Services Tax (GST), Service
Tax, Central Excise, Custom Duty, Value-Added Tax, etc.

Non-Tax Revenue:
Non-tax revenue refers to receipts of the government from all
sources other than those of tax receipts.
The main sources of non-tax revenue are:

1. Interest – Government receives interest on loans given by

it to the state governments, union governments and
private enterprises and general public.
2. Profits and dividends – Government earns profit through
PSUs like Railways, BHEL, LIC, etc. It earns profit from sale
proceeds of the products of such public enterprises.
3. Fees – Fees refer to charges imposed by the government
to cover the cost of recurring services provided by it. It is a
compulsory contribution. Examples are court fees,
registration fees, etc.
4. Fines and penalties – They refer to those payments which
are imposed on law breakers. Fines are levied to maintain
law and order, like fine for jumping red light.
5. Escheats – It refers to claim of the government on the
property of a person who dies without leaving behind any
legal heir or a will.
6. Gifts and grants – Government receives gifts and grants
from foreign governments and international institutions,
individuals and companies. Such gifts are not a fixed
source of revenue.
7. Forfeitures – These are in the form of penalties which are
imposed by the courts for non-compliance of orders or
non-fulfilment of contracts, etc.
 8. Special assessment – It refers to the payment made by
the owners of those properties whose value has
appreciated due to developmental activities of the
government.

CAPITAL RECEIPTS
Capital receipts refer to those receipts which either create a liability
or cause a reduction in the assets of the government.
They are non-recurring and non-routine in nature.

Conditions to be satisfied:

1. Must create liability for the government. For example,

borrowings are capital receipts as they lead to an increase
in the liability of the government.
2. Must cause decrease in assets. For example, receipts
from sale of sale of shares of PSUs is a capital receipt as it
leads to decrease in assets of the government.

Any one of these conditions must be satisfied.

Sources of capital receipts:

Capital receipts are broadly classified into 3 groups:
 Borrowings
 Recovery of loans
  Other receipts

Other receipts include 2 parts. They are,

a. Disinvestment
b. Small savings

Borrowings:
Borrowings are the funds raised by the government to meet excess
expenditure.
Government borrows funds from:
i) Open Market (Public)
ii) Reserve Bank of India (RBI)
iii) Foreign governments (like USA)
iv) International institutions (World Bank, IMF)

Borrowings are capital receipts as they create a liability for the

government.

Recovery of Loans:
Government grants loans to state governments or union territories,
PSUs and abroad governments. Recovery of such loans are capital
receipts as it reduces the asset of the government.

Other Receipts:
These include:
1. Disinvestment – Disinvestment refers to the act of selling
a part or whole of shares of selected PSUs held by the
 government. They are termed as capital receipts as they
reduce the assets of the government.
2. Small savings – Small savings refers to funds raised from
the public in the form of Post Office Deposits, National
Saving Certificates, etc. they are termed as capital receipts
as they lead to increase in liability.

BUDGET EXPENDITURES
Budget expenditure refers to the estimated expenditure of the
government during a given fiscal year. It gives a detailed analysis of
various types of expenditure and broad reasons for the variations in
estimates.
It provides complete information about the total expenditure of the
Union government in a financial year.

This exhaustive information is classified into two broad categories as

per the end-use:
 capital expenditure
 revenue expenditure.

Expenditure profile contains budgetary trends on important policy

issues such as:
 Gender budget
 Welfare of women and children
 Resource allocation for the North-Eastern states
 Welfare of SC/STs
It also contains consolidated information about government schemes
such as:
 Central sector schemes and Centrally sponsored
schemes
 Subsidies
 Investment in PSUs
 Resources of PSUs
Revenue Expenditure:
Revenue expenditure refers to the expenditure which neither creates
any asset nor causes reduction in the liability of government.
It is recurring in nature, and is incurred on normal functioning of the
government and the provisions for various services. E.g. Payment of
salaries, pensions, expenditure on health services, defence, grants to
state, etc.
Conditions to be satisfied:
1. Must not create asset. For example, payment of salaries is
revenue expenditure as it does not create any asset.
2. Must not cause any decrease in liability. For example,
repayment of borrowings is not revenue expenditure as it
leads to reduction in liability of the government.

Capital Expenditure:
Capital expenditure refers to the expenditure which either creates an
asset or causes a reduction in the liabilities of the government.
It is non-recurring in nature. It adds to capital stock of the economy
and increases its productivity through expenditure on long period
developmental programmes, like Metro. E.g. loans to states,
expenditure of building roads, purchase of machinery, etc.
Conditions to be satisfied:
 1. Must create an asset. For example, construction of Metro
is a capital expenditure as it leads to creation of asset.
2. Must cause decrease in liabilities. For example,
repayment of borrowings is a capital expenditure as it
leads to reduction in the liabilities of the government.
(Any one)

CLASSIFICATION OF VARIOUS ITEMS

 How to classify a receipt as Revenue or Capital?

1) Revenue Receipt: A receipt is a revenue receipt if, it either

creates a liability or reduces an asset.
2) Capita Receipt: A receipt is a capital receipt, if it neither
creates a liability nor reduces any asset.

 How to classify expenditure as Revenue or Capital?

1) Revenue Expenditure: An expenditure is a revenue

expenditure if, it neither creates any asset nor reduces
any liability.
2) Capital Expenditure: An expenditure is a capital
expenditure if, it either creates an asset or reduces any
liability.

 How to classify tax as Direct or Indirect tax?

 1) Direct Tax: A tax is a direct tax if, its burden cannot be
shifted. For example, Income tax.
2) Indirect Tax: A tax is an indirect tax if, its burden can be
shifted. For example, GST.

TYPES OF BUDGET
The difference between government receipts and government
expenditure may be surplus, or deficit. In this sense, there are 3 main
types of budget.

Balanced Budget:
A balanced budget is a situation, in which estimated revenue of the
government during the year is equal to its anticipated expenditure.
Estimated Revenue = Estimated Expenditure

Surplus Budget:
The budget is a surplus budget when the estimated revenues of the
year are greater than anticipated expenditures.
Expected Revenue > Proposed Expenditure.
It shows the financial soundness of the government.

Deficit Budget:
Deficit budget is one where the estimated government expenditure
is more than expected revenue.
Estimated Revenue < Proposed Expenditure.
Such deficit amount is generally covered through public borrowings
or withdrawing resources from the accumulated reserve surplus. 

TYPES OF UNION BUDGET

1. General Budget – The initial structure of the present-day
general budget is known as the Traditional Budget. The
main aim of the General Budget is to set up financial
control over the Executive and the Legislative. This budget
contains the details of income and expenditure of the
Government.
2. Zero-based Budget – In the zero-based budget, neither
expenses incurred during the previous financial years are
not considered nor the expenditure of the last financial
year used for the coming years. Under Zero-based
budgets, every activity is decided based on Zero basis i.e.
the previous expenditures are not considered.
3. Outcome Budget – In India, development-related
schemes such as MGNREGA, Digital India, etc. are started
every year. The large sum of money is spent on these
schemes every year. Outcome Budget acts as a pathfinder
for all the Ministries and Departments which helps in
improving Services, the performance of the programmes.
4. Gender Budget – If a budget describes the schemes and
plans for the welfare of children and females, it is known
as Gender Budget. Through Gender Budget, the
Government declares an amount to be spent over the
development, Welfare, Empowerment schemes and
programmes for Females.
5. Performance Budget – When the outcome of any activity
is taken as the base of any budget, such a budget is known
as ‘Performance Budget’. In the Performance Budget, it is
the compulsion of the government to tell that 'what is
 done', 'how much done' by it for the betterment of the
people.  

MEASURES OF GOVERNMENT BUDGET

When the government spends more than it collects, then it incurs a
budgetary deficit. Budgetary deficit is defined as excess of total
estimated expenditure over total estimated revenue.
Budgetary deficit is of 3 types.
 Revenue deficit
 Fiscal deficit
 Primary deficit

Revenue Deficit:
Revenue deficit refers to excess of revenue expenditure over
revenue receipts during the given fiscal year.
Revenue deficit signifies that government’s own revenue is
insufficient to meet the expenditures on normal functioning of
government departments and provisions for various services.
Revenue Deficit = Revenue Expenditure – Revenue Receipts

Implications of Revenue Deficit:

1. It indicates the inability of the government to meet its
regular and recurring expenditure in the proposed budget.
2. It implies that government is dissaving, i.e. government is
using up savings of other sectors of the economy to
finance its consumption expenditure.
 3. Revenue deficit either leads to an increase in liability in
the form of borrowings or reduces the assets through
disinvestment.
4. Use of capital receipts for meeting the extra consumption
expenditure leads to an inflationary situation in the
economy.
5. A high revenue deficit gives a warning signal to the
government to either curtail its expenditure or increase its
revenue.

According to far-sighted approach, revenue receipts should always

be more than revenue expenditures so that surplus can be used for
development projects. However, Indian Budget is facing revenue
deficit for the past several years.

Measures to reduce Revenue Deficit:

1. Reduce expenditure – Government should take serious
steps to reduce its expenditure and avoid unproductive or
unnecessary expenditure.
2. Increase revenue – Government should increase its
receipts from various sources of tax and non-tax
revenues.

Fiscal Deficit:
Fiscal deficit refers to the excess of total expenditure over total
receipts (excluding borrowings) during the given fiscal year.

It is widely used as a budgetary tool for explaining and understanding

the budgetary developments in India.
The extent of fiscal deficit is an indication of how far the government
is spending beyond its means.
Fiscal Deficit = Total Expenditure – Total Receipts (excluding
borrowings)

Implications of Fiscal Deficit:

1. Debt Trap – Fiscal deficit indicates the total borrowing
requirements of the government. Borrowings also require
payment of interest. Interest payments increase the
revenue expenditure, which leads to revenue deficit. It
creates a vicious circle of fiscal deficit. As a result, country
is caught in a debt trap.
2. Inflation – Government mainly borrows from Reserve
Bank of India (RBI) to meet its fiscal deficit. RBI prints new
currency to meet the deficit requirements. It increases the
money supply in the economy and creates inflationary
pressure.
3. Foreign Dependence – Government also borrows from
rest of the world, which raises its dependence on other
countries.
4. Hamper the Future Growth – Borrowings increase the
financial burden for future generations. It adversely
affects the future growth and development prospects of
the country.

Sources of Financing Fiscal Deficit:

Government has to look out for different options to finance the fiscal
deficit. The 2 main sources are:
1. Borrowings – Fiscal deficit can be met by borrowings from
the internal sources (public, commercial banks etc.) or the
 external sources (foreign governments, international
organisations etc.).
2. Deficit Financing – Government may borrow from RBI
against its securities to meet the fiscal deficit. RBI issues
new currency for this purpose. This process is known as
deficit financing.
Borrowings are considered a better source as they do not increase
the money supply which is regarded as the main cause of inflation.
On the other hand, deficit financing may lead to inflationary trends in
the economy due to more money supply.

Primary Deficit:
Primary deficit refers to difference between fiscal deficit of the
current year and interest payments on the previous borrowings.
The total borrowing requirement of the government includes the
interest commitments on accumulated debts. Primary deficit reflects
the extent to which such interest commitments have compelled the
government to borrow in the current period.
Primary Deficit = Fiscal Deficit – Interest Payments

Implications of Primary Deficit:

It indicates, how much of the government borrowings are going to
meet expenses other than the interest payments. The difference
between fiscal deficit and primary deficit shows the amount of
interest payments on the borrowings made in past. So, a low or zero
primary deficit indicates that interest commitments (on earlier loans)
have forced the government to borrow.

PROCESS OF GOVERNMENT BUDGET

The Fiscal Responsibility and Budget Management (FRBM) Act was
passed by the Indian Parliament in 2003 for budget management.

Documents included in the Budget:

1. Annual Financial Statements (AFS) – Article 112

2. Demand for Grants – Article 113
3. Appropriation Bill – Article 114(3)
4. Finance Bill – Article 110(a)
5. Expenditure Budget – Vol.1&2
6. Receipts Budget
7. Budget at a glance
8. Highlights of Budget
9. Other various documents

According to Article 77 (3), the Union Finance Minister has been

made responsible by the President to prepare the budget.

Stages of Budget Preparation:

In parliament, the budget goes through 5 stages:

1. Presentation of budget with Finance Minister’s speech

2. General discussion of the budget. After this, there is an
adjournment of houses so that standing committees
scrutinises the demand for grants for a month.
3. Voting on demand for grants in Lok Sabha
4. Passing of Finance bills
5. Passing of Appropriation bills.
1. Budget presentation – The budget is presented to the
parliament on the date fixed by the President. Generally,
it was presented on the last working day of February.
The general budget is presented in the Lok Sabha by Minister of
Finance. At the conclusion of the speech of the finance minister in
Lok Sabha, annual financial statement is laid on the table of Rajya
Sabha.

2. Discussion of budget – It is done in two stages. In the first

stage, broad outlines of the budget, principle and policies
underlying it are to be discussed in general discussion of
the budget which lasts for about 4-5 days.

In second stage discussion is held based on reports of concerned

Departments/Ministries standing committees, which is usually done
after a month of a general discussion of the budget.

3. Vote on account – Since the passing of the budget takes

almost 2 months, the Government requires the sanction
of an amount to maintain itself for this period.

According to Art 116, a special provision called 'Vote on Account' is

created by which vote of parliament is obtained by the government
for a sum sufficient generally for 2 months to incur expenditure .

4. Discussion and voting for demand on grants – After

standing committee reports are presented to the house,
the house proceeds with a Ministry wise discussion of
committee reports and voting on demand for grants.

The time for discussion and voting on demand for grants is allocated
by the speaker in consultation with the leader of the house.
 5. Finance bill – It is introduced in the Lok Sabha
immediately after the presentation of the general budget.
The finance bill contains fresh taxation proposals and
variations in existing duties.

6. Appropriation bill – An appropriation bill is intended to

give authority to the Government of India to incur
expenditure from the consolidated fund of India.

The parliament has to pass a financial bill within 75 days of its

introduction. After discussion in both the houses on demand for
Grants, Financial bill and appropriation bill and voting of the Lok
Sabha Budget is enacted and expenditure can be incurred from the
consolidated fund of India.

UNION BUDGET FOR 2020-21

Nirmala Sitharaman, Minister of Finance, presented the Indian
Budget 2020 on February 1, 2020.

Budget at a Glance presents broad aggregates of the Budget in a

reader-friendly document.

1. Fiscal Deficit is the difference between the Revenue and

the total expenditure. FD is reflective of the total
borrowing requirements of Government.
2. Budget 2020-21 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 3,43,678
crores over RE (2019-20) while keeping the fiscal deficit at
3.8% of GDP.
3. In RE 2019-20, the total expenditure has been kept at
26,98,552 crore and is more than Provisional Actual
(2018-19) by `3,83,439 crore.
4. 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 (2020-
21) is 13,90,666 crores, with an increase of `2,02,705
crore over RE (2019-20).
5. Actuals for 2018-19 are provisional.

Union budget
 2020 BUDGET SUMMARY
Budget 2020 is focussed on 3 major themes – 

 Aspirational India
 Economic Development for all
 A Caring Society. 

The Budget allocates funds and proposes new schemes for every
sector under these three themes.

The Union Budget 2020 is focused on reviving the Indian Economy in

this fiscal through changes in Income Tax Slabs, taxation reforms,
policy changes for Real Estate Sector, the resurgence of Automobile
Sector, encourage privatization in CPSEs, boost for MSMEs, Bank
reforms and so much more.

Theme One: Aspirational India

Agriculture Sector

1. Budget is aimed at doubling farmer income by 2022.

2. Integrated Farming Systems to be developed in rain-fed
areas.
3. Negotiable Warehousing Receipts Financing has crossed
Rs 6,000 crore.
4. Budget fixes the target of Agricultural Credit at Rs 15 lakh
crore. 
5. Indian Railways to set up “Kisan Rail” so that farm goods
can be quickly transported. It will also be used for cold
storage of goods through PPP model. 
 6.  Indian Railways to set up “Kisan Rail” so that farm goods
can be quickly transported. It will also be used for cold
storage of goods through PPP model. 

Water and Sanitation

1. Budget allocates Rs 12,300 crore for Swachch Bharat

Mission. 
2. Budget allocates Rs 69,000 crore for the Health sector.
3. Budget seeks to set up hospitals in Indian Tier-II and Tier-
III cities under the PPP model.

Education Sector

1. As per the budget, 150 higher education institutions will

start apprenticeships in 2020-21.
2. A degree level online education programme will be
launched to provide quality education to deprived
sections students.
3. The Budget allocates Rs 99,300 crore for the Education
sector and Rs 3000 crore for Skill development.
4. Budget proposes to attach a Medical College to every
existing district hospital under the PPP model.

Theme Two: Economic Development

Indian Railways

1. A large solar power capacity proposed for the Indian

Railways.
2. By 2024, the Government would monetize 12 lots of
national highways.
 3. With the help of UDAN scheme, 100 airports will be built
by 2024.
4. Rs 1.7 lakh crore allocated for transport infrastructure.

Energy Sector

1. Budget allocates Rs 22,000 crore for the Power and

Renewable Energy Sector.
2. It provides Rs.8,000 crore in the next 5 years for “National
Mission on Quantum Technology and Applications”.
3. Budget allocates Rs 6000 crore for the Bharat Net
programme 

Theme Three: A Caring Society

Art and Culture

1. The government will constitute “Indian Institute of

Heritage and Conservation” as a deemed university
2. The budget allocates Rs 3150 crore for the Ministry of
Culture.

Tourism Sector

1. The Tourism Sector will grow at 7.8% to Rs 1.88 lakh crore.

Climate

1. The Coalition for Disaster Resilient Infrastructure will be

implemented from January 2021.
 2. It allocates Rs 4,400 crore to promote clean air in cities
with a population of over 1 million people.

Banking Sector

1. It proposes the creation of the New National Policy on

Official-Statistics

2. Deposit insurance cover has been increased tremendously

from Rs 1 lakh to Rs 5 lakh.

Corporate Sector

1. The debt recast window of MSME is extended by one year

to March 31, 2021.
2. Certain categories of government securities will now be
opened for Non-Resident Investors. 
3. The FPI Limit in Corporate bond has increased to 15%.

Income Tax Reforms

1. Budget 2020 transforms the Income Tax regime by

introducing new tax slabs and rates.
2. It creates income slabs of up to Rs 5 lakh, from 5 lakh to
7.5 lakh, from 7.5 lakh to 10 lakhs, from 10 lakh to 12.5
lakh, from 12.5 lakh to 15 lakh and above.

2020 BUDGET ANALYSIS

Budget Expenditure: Rs.30,42,230 crores
The Indian Budget 2020 is of 30.42 lakh crore rupees. The
expenditure has increased significantly when compared with the
Union Budget 2019, where the expenditure figure was 26.98 lakh
crore rupees.

Total Receipts: Rs.22,45,893 crores

The total revenue expected in the financial year 2020-21(without
considering borrowing) is only Rs. 22.45 lakh crores. The expenditure
(Rs.30.42 lakh crores) is way higher than the receipts.

Tax Revenue: Rs.16,35,909 crore

The Finance minister estimates a tax revenue of Rs.16.35 lakh crores
for the financial year 2020-21. This is a lower the last year budget
estimates (Rs.16,49,582 crore). The total revenue receipts estimated
are Rs. 19.77 lakh crore (meets only 66% of total expenditure).

The borrowings, other liabilities: Rs. 7,96,337 crores

The Indian government needs to borrow Rs. 7.96 lakh crore in the
financial year 2020-21 to meet its expenditure. As per budget 2020,
Fiscal Deficit is 3.5% of Indian GDP.

Interest payments alone are Rs. 7,08,203 crores!

The Indian government had already taken many loans – mainly from
the public. The interest payments for the same is above Rs. 7.08 lakh
crore. The Primary Deficit of India, as per the latest budget is Rs.
88,134 crores. This comes only as 0.4% of GDP. 

CRITICISM ABOUT GOVERNMENT BUDGET

1. Corporate Tax – Under a phased reduction plan for corporate
taxes, the budget proposed to bring under 25% tax ambit
companies with an annual turnover of up to Rs 400 crore, in place
of the earlier cap of Rs 250 crore.
The move came under criticism from experts who said the tax rejig
should have been applicable to all companies and not just a select
section.
2. Defence – The budget turned out to be big damp squib for the
armed forces. At a time when India's security risks are at an all-
time high, no specific mention of the forces came as a major
dampener for both the forces and the country at large.
3. Jobs – At the season of serious job woes for the country,
Sitharaman's budget disappointed one and all as no move was
announced to ease one of India's biggest pain points.
4. Tax dampener – Standard deduction and TDS threshold didn't find
a mention in Sitharaman's budget. It came as dampener for the
salaried taxpayer because Piyush Goyal had promised to hike
these limits in his February interim budget.
5. Fuel bill – In a blow to owners of cars and bikes, Sitharaman
proposed to increase Special Additional Excise duty and Road and
Infrastructure Cess each by one rupee a litre on petrol and diesel.

FISCAL POLICY
In economics and political science, fiscal policy is the use of
government revenue collection and expenditure to influence a
country's economy.
It is the means by which a government adjusts its spending levels and
tax rates to monitor and influence a nation's economy.

Fiscal policy is largely based on the ideas of British economist John

Maynard Keynes (1883-1946), who argued that economic recessions
are due to a deficiency in the consumption spending and business
investment components of aggregate demand.

Keynes believed that governments could stabilize the business

cycle and regulate economic output by adjusting spending and tax
policies to make up for the shortfalls of the private sector. His
theories were developed in response to the Great Depression, which
defied classical economics' assumptions that economic swings were
self-correcting.

Main objectives of Fiscal Policy in India:

1. Economic growth: Fiscal policy helps maintain the economy’s

growth rate so that certain economic goals can be achieved.
2. Price stability: It controls the price level of the country so that
when the inflation is too high, prices can be regulated.
3. Full employment: It aims to achieve full employment, or near
full employment, as a tool to recover from low economic
activity.

BIBLIOGRAPHY

1. www.slideshare.net
2. Economic Times newspaper
3. www.comgyan.com
4. economicsdiscussion.net
5. toppr.com
6. cbseguide.com
7. Sandeep Garg textbook
8. NCERT textbook
9. www.indiabudget.gov.in