NATIONAL BUDGETING IN INDIA

The 2012 United States federal budget is the United States federal budget to fund government operations for the fiscal year 2012, which is October 2011September 2012. The original spending request was issued by President Barack Obama in February 2011, while the Republican-held House of Representatives, coming off of a major victory in the 2010 Congressional elections associated with the Tea Party movement, in April 2011 announced a competing plan, The Path to Prosperity. The budget plans were both intended to focus on deficitreduction, but differed in their changes to taxation, entitlement programs, defense spending, and research funding. The budget was greatly affected by the Budget Control Act of 2011, which was passed in August 2011 as a resolution to the debt-ceiling crisis and mandated budget cuts over the subsequent ten years beginning with Fiscal Year 2012. The actual appropriations for Fiscal Year 2012 were enacted as three appropriations bills in November and December 2011, in accordance with the United States budget process. In addition, legislation was passed to extend a cut in the Social Security payroll tax for the entirety of calendar year 2012, as part of two bill enacted in December 2011 and February 2012.

History Early proposals:In February 2010, President Obama formed a bipartisan commission, called the BowlesSimpson Commission, to recommend steps that could be taken to reduce future budget deficits. The commission released its report on November 10, 2010, which recommended deep domestic and military spending cuts, reforming the tax system by eliminating many tax breaks in return for lower overall rates, and reducing benefits for Social Security and Medicare. The plan did not receive the supermajority vote within the commission which it needed to be directly sent to Congress, and portions of the plan were rejected by both parties.

The Obama administration proposed his 2012 budget on February 14, 2011. Obama's budget proposal aimed to reduce annual deficits to more sustainable levels by making selective cuts in spending, while increasing support in specific areas such as education and clean energy to foster long-term economic growth. The plan did not contain specific proposals to rein in spending on entitlement programs such as Medicare,Medicaid, and Social Security, which are expected to make up much of the increase in the deficit in future years. The budget represented a shift from the Obama administration's strategy in previous years of using increased government spending, such as the American Recovery and Reinvestment Act of 2009, to combat the late 2000s recession. The 2012 budget plan was instead projected to reduce deficits by $1.1 trillion over the next ten years. Republicans criticized the plan for not going far enough to reduce future deficits. A motion to proceed on President Obama's 2012 budget proposal was defeated in the Senate by a margin of 0-97 votes on May 25, 2011, the same day that the Ryan budget was also defeated. A competing plan, called The Path to Prosperity, was announced by House Republicans, led by Representative Paul Ryan, on April 5, 2011. This plan would reportedly cut $5.8 trillion in spending over ten years, but would also reduce tax income by $4.2 trillion below current projections. The plan would make no further reduction in defense spending beyond the Obama administration's plan, but would make major changes to Medicare, Medicaid, and Social Security, which was expected to pass more of the cost of these programs onto individuals. It would also cut energy research and other applied research and development. This plan was criticized for disproportionately cutting programs which benefit the disadvantaged and stifling innovation, while not cutting defense spending further and containing deep tax cuts. The House Republican plan was defeated in the Senate by a margin of 40-57 votes on May 25, 2011. In response to the Republican plan and a recent deal on the 2011 budget, President Obama on April 13, 2011 presented an alternative plan in a major policy speech. This new plan would cut deficits by $4 trillion over 12 years through a combination of broad spending cuts and tax increases, including the expiration of the Bush tax cuts for incomes over $200,000 and proposed a cap on increases in Medicare and Medicaid spending, to be paid for by individuals. Obama criticized the Republican plan for enriching the wealthy through tax cuts while placing a greater economic burden on the elderly through Medicare

cuts. Obama's plan was criticized by Republicans for its large cuts in defense spending and for its lack of specific detail. On June 23, at a hearing of the Budget Committee, CBO director Douglas Elmendorf was asked what his agency made of the proposals in that presidential address. We dont estimate speeches, he said. We need much more specificity than was provided in that speech."

Implications of debt limit deal:A controversy arose in July 2011 over the raising of the federal debt limit, with Republicans in Congress demanding spending cuts in the 2012 and subsequent budgets in return for raising the debt limit. On July 19, 2011, the Republican-led House passed a bill, the Cut, Cap and Balance Act, by a margin of 234190 which would require $111 billion in cuts in 2012 spending levels, exempting defense, Medicare, and Social Security from these cuts, and would limit subsequent federal spending to about 20% of the gross national product as compared to the current 24%. It did not immediately increase the debt limit, but would have required Congress to pass a Balanced Budget Amendment to the United States Constitution before increasing the debt limit. The bill was tabled by a vote of 5146 in the Senate on July 22, and thus defeated. An alternate plan proposed by the bipartisan Gang of Sixsenators and favored by the Obama administration would contain about $3.7 trillion in deficit reduction over the next decade, including both new revenue and large spending cuts, including in entitlement healthcare and defense, failed to gain traction. Two rival plans were then prepared by the Senate Democrats and House Republicans. The Democratic plan would immediately raise the debt limit by $2.7 trillion, enough to last beyond the 2012 elections, and would decrease spending by $900 billion over ten years. The Republican plan would cut a total of $850 billion over ten years, and would raise the debt limit in two stages: by $1 trillion immediately, enough to last until early 2012, and then would form a bipartisan committee to recommend the second half of the budget cuts, which upon being passed by Congress would increase the debt limit by another $1.6 trillion. Neither plan included revenue increases or cuts to entitlement programs. The vote on the Republican plan was delayed several times as more conservative members of the

caucus refused to support it. After being altered to again require passage of a Balanced Budget Amendment before the second stage of debt limit increases, it passed the House 218210, with 22 Republicans opposing the bill. It was defeated in the Senate two hours later by a vote of 5941, as the Democratic plan was prepared to be taken up there. On July 31, 2011, it was announced that President Obama and the leadership of both legislative chambers had reached a deal on the debt limit legislation. The deal guaranteed $2.4 trillion in immediate and eventual debt limit increases. It mandated $917 billion in spending cuts over ten years, of which $21 billion would be included in the FY2012 budget. It would then give Congress a choice between either accepting the recommendation of a Joint Select Committee on Deficit Reduction which would cut the deficit by $1.21.5 trillion through spending cuts and/or revenue increases, or accepting automatic budget cuts to national security funding (including defense spending) and to Medicare, which would start in the FY2013 budget. Congress would also be required to vote on a Balanced Budget Amendment. On August 1, the Budget Control Act of 2011 passed the House 269161, with 66 Republicans and 95 Democrats voting against the bill. On August 2, it passed in the Senate 7426, and was signed into law by President Obama the same day.

Initial continuing resolutions and FEMA controversy:Because the federal budget legislation was not expected to be enacted by the September 30, 2011 deadline, work began on a continuing resolution to fund the government temporarily through November 18, 2011 with an across-the-board reduction of 1.503% below the 2011 budget levels. However, a dispute arose between the Republican-led House and the Democrat-led Senate over the amount of additional funding for theFederal Emergency Management Agency for costs associated with relief from Hurricane Irene, and whether this extra funding should be partially offset with cuts elsewhere; these proposed cuts mainly targeted a program to fund development of fuel-efficient automobiles. The Senate rejection of the House bill on September 23, 2011 raised the possibility of a government shutdown on October 1. However, the revelation that FEMA would not in fact run out of money before the end of they year allowed a pair of continuing resolutions to be passed by the Senate on September

26: one lasting until October 4, 2011 to give the then-out-of-session House of Representatives time to consider the second resolution, which funds the government through the first seven weeks of the 2012 fiscal year, until November 18, 2011.The House passed the short-term resolution on September 29, 2011 by unanimous consent in an unusual example of passing legislation during a pro forma session. After the House came back into normal session, the second continuing resolution was passed by a vote of 35266 on October 4, 2011.

Budget legislation passed:On November 18, 2011, the first appropriations bill was enacted, the Consolidated and Further Continuing Appropriations Act, 2012. It combined the three appropriations bills for Agriculture, Commerce/Justice/Science (CJS), and Transportation/Housing and Urban Development (THUD), and also contained a continuing resolution providing funding for other departments until December 16, 2011. On December 15, 2011, a deal was reached on the remaining nine appropriations bills, which were combined into the Consolidated Appropriations Act, 2012. One point of contention was that an earlier draft of the bill supported by Republicans contained new restrictions on travel to Cuba, which had been relaxed by the Obama administration in 2009. These restrictions were removed in the enacted bill at the insistence of the Obama administration. A separate Disaster Relief Appropriations Act, 2012 was also included in the package, as well as aconcurrent resolution which offset the increased disaster funding by imposing a 1.83% across-the-board spending cut to all discretionary programs except Defense and Veterans Affairs.Two more continuing resolutions were also passed, one extending the deadline by one day so that the Senate could vote on the package, and one until December 23, 2011. The two appropriations bills were enacted on December 23, 2011, but the concurrent resolution failed in the Senate. On December 17, 2011, the Senate passed legislation to extend the Social Security payroll tax cut which had been originally enacted for the 2011 calendar year as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 during the FY2011 budget negotiations. The cut had been from 6.2% to 4.2%. The extension was only

for two months, rather than the full-year extension which had been sought, and the legislation also extended unemployment benefits and maintained the same rates for Medicare reimbursement, and paid for these initiatives with new fees on Fannie Mae and Freddie Mac. Points of contention included a Democratic plan to fund the tax cut with a new surtax on income over $1 million, which was dropped in later stages of negotiation, as well as attempts by Republicans to insert language which would speed the approval of the Keystone XL pipeline, which had recently been delayed by the Obama administration.[23][27] The bill was initially rejected in the House, whose leaders insisted on a full-year extension, despite the fact that the Senate had already adjourned for the year. However, after criticism from other Republicans that the impasse would harm their prospects in the upcoming 2012 elections, the House leadership on December 23, 2011 announced that it would pass the Senate bill in return for Democrats promptly beginning negotiations on a full-year extension. The bill, the Middle Class Tax Relief and Job Creation Act of 2011, was passed by the House and signed by the President later that day. The tax cut for the remainder of the year was passed as the Middle Class Tax Relief and Job Creation Act of 2012 on February 17, 2012, by a vote of 293132 in the House and 6036 in the Senate. The bill contained the payroll tax cut as well as an extension of unemployment benefits and the Medicare reimbursement rates. The cost of the tax cut was not offset by spending cuts, but the other provisions were offset by cuts in federal healthcare and pension programs. Republican support for the bill was motivated by a desire to not oppose a tax cut in an election year. Some Democrats criticized the bill for directing spending cuts at federal employees rather than generating funds by increasing taxes on the wealthy or closing tax loopholes.

Major initiatives

No new funding for intercity and high-speed rail was included in the budget. This

funding had originally been introduced as part of theAmerican Recovery and Reinvestment Act stimulus bill in 2009, but had proved controversial as several Republican governors elected in the2010 elections subsequently rejected the federal

funding for rail projects in their states. However, funding for 26 short-distance routes eliminated in the House version was restored in the enacted bill.

The National Science Foundation's budget was increased 2.5%, to $7.03

billion, and the National Institutes of Health's was increased slightly from $30.4 billion to $30.7 billion. However, the Office of Science and Technology Policy's budget was cut by 32% to $4.5 million, in retaliation for the office allegedly ignoring a provision in 2011 budget legislation banning it from pursuing collaborations with China. Funding for the James Webb Space Telescope, the successor to the Hubble Space Telescope, was maintained, as was funding for the Joint Polar Satellite System.

The legislation contained a ban on using federal funds to enforce the phase-out of

incandescent light bulbs that had been mandated in theEnergy Independence and Security Act of 2007, but requires recipients of more than $1 million in Department of Energy grants to comply with the energy efficiency standards.

Regular funding for the Department of Defense increased from $513 billion to $518

billion, including a 1.6% pay raise for military personnel. Funding for the wars in Iraq and in Afghanistan was reduced from $158 billion to $115 billion.

Funding for the Race to the Top education program was cut from $698 million to

$550 million. A proposal to create an educational technology research and development program, Advanced Research Projects Agency-Education (ARPA-ED), in a similar vein to the successful DARPA research agency within the Department of Defense, was not enacted.

The Obama administration had requested to create a Climate Service Transfers of prisoners from the Guantanamo Bay detention camp to the United The Department of Justice was forbidden from consolidating or maintaining certain

within NOAA, similar to the National Weather Service. This request was not enacted.

States was prohibited, and language on transfers to other countries was revised.

firearms records, and it was prohibited for health officials to use federal money to advocate gun control.

Total revenues and spending

The Obama administration's budget request contained $2.627 trillion in revenues and $3.729 trillion in outlays for 2012, for a deficit of $1.101 trillion. The April 2011 Republican plan contained $2.533 trillion in revenues and $3.529 trillion in outlays. The enacted budget contained $2.469 trillion in receipts and $3.796 trillion in outlays, for a deficit of $1.327 trillion.

Total receipts:Item Requested Enacted

Individual income tax

$1141 billion

$1165 billion

Corporate income tax

$329 billion

$237 billion

Social Security and other payroll tax

$925 billion

$841 billion

Excise tax

$103 billion

$79 billion

Customs duties

$30 billion

$31 billion

Estate and gift taxes

$14 billion

$11 billion

Deposits of earnings and Federal Reserve System $66 billion

$81 billion

Other miscellaneous receipts

$20 billion

$24 billion

Total

$2.627 trillion $2.469 trillion

Total outlays by agency:The Department of Defense budget is divided into two parts: the base budget, and Overseas Contingency Operations which includes the Iraq War and the War in Afghanistan. Discretionary Item Requeste d Enacte d Requeste d Enacte d Mandatory

Department of Defense including Overseas Contingency Operations

$701.6 billion

$683.0 billion

$5.8 billion

$5.3 billion

Department of Health and Human $84.2 Services including Medicare and Medi $88.6 billion billion caid

$804.2 billion

$787.8 billion

Department of Education

$78.9 billion

$79.1 billion

$8.0 billion

$19.4 billion

Department of Veterans Affairs

$58.8 billion

$58.8 billion

$65.6 billion

$70.4 billion

Department of Housing and Urban Development

$49.8 billion

$47.9 billion

$0.4 billion $8.9 billion

Department of State and Other International Programs

$62.7 billion

$53.4 billion

$0.05 billion

$2.6 billion

Department of Homeland Security

$46.3 billion $58.8

$0.6 billion

$1.6 billion

Discretionary Item Requeste d Enacte d

Mandatory

Requeste d

Enacte d

billion

Department of Energy

$42.5 billion

$42.3 billion

$0.6 billion

$1.7 billion

Department of Justice

$24.1 billion

$28.8 billion

$9.1 billion

$5.8 billion

Department of Agriculture

$27.6 billion

$28.8 billion

$116.4 billion

$121.9 billion

National Aeronautics and Space Administration

$18.2 billion

$17.7 billion

$0.01 billion

$0.02 billion

Department of Transportation

$27.0 billion

$25.6 billion

$62.6 billion

$58.6 billion

Department of the Treasury

$14.6 billion

$13.5 billion

$114.5 billion

$148.7 billion

Department of the Interior

$13.1 billion

$12.4 billion

$0.8 billion

$1.1 billion

Department of Labor

$13.7 billion

$14.0 billion

$95.3 billion

$113.1 billion

Social Security Administration

$12.5 billion $11.7

$804.6

$817.5

Discretionary Item Requeste d Enacte d

Mandatory

Requeste d

Enacte d

billion

billion

billion

Department of Commerce

$11.3 billion

$10.9 billion

$1.9 billion

$0.5 billion

Army Corps of Engineers Civil Works $7.9 billion

$9.3 billion $0.1 billion

$0.06 billion

Environmental Protection Agency

$10.2 billion $9.5 billion $0.2 billion

$0.1 billion

National Science Foundation

$7.6 billion

$8.0 billion $0.3 billion

$0.2 billion

Small Business Administration

$1.2 billion

$1.4 billion

$0.007 billion

$1.8 billion

Corporation for National and Community Service

$1.1 billion

$0.8 billion $0.03 billion

$0.007 billion

Net interest

N/A

N/A

$0.2 billion

$0.2 billion

Disaster costs

$0.006 billion

$<0.005 billion

N/A

N/A

Other spending

$20.7 billion

$19.3 billion

$57.5 billion

$88.0 billion

Discretionary Item Requeste d Enacte d

Mandatory

Requeste d

Enacte d

Total

$1.361 trillion

$1.338 trillion

$2.140 trillion

$2.252 trillion

Total outlays by budget function:Republican proposal

Requested Function Title 050

Enacted

National Defense

$737.537 billion

$712 $716.300 billion billion

150

International Affairs

$63.001 billion

$36 billion

$56.252 billion

250

General Science, $32.284 Space and billion Technology

$30 billion

$30.991 billion

270

Energy

$23.411 billion

$16 billion

$23.270 billion

300

Natural Resources and Environment

$42.703 billion

$37 billion

$42.829 billion

350

Agriculture

$18.929

$20 billion

$19.173

Requested Function Title billion

Republican proposal

Enacted

billion

370

Commerce and Housing Credit

$23.620 billion

$17 billion

$79.624 billion

400

Transportation

$104.854 billion

$80 billion

$102.552 billion

450

Community and $25.701 Regional billion Development

$24 billion

$31.685 billion

500

Education, Training, $106.172 Employment and billion Social Services

$100 billion

$139.212 billion

550

Health

$373.774 billion

$347 billion

$361.625 billion

570

Medicare

$492.316 billion

$482 billion

$484.486 billion

600

Income Security

$554.332 billion

$501 billion

$579.578 billion

650

Social Security

$767.019 billion

$766 billion

$778.574 billion

700

Veterans Benefits $124.659

$127 billion

$129.605

Requested Function Title and Services billion

Republican proposal

Enacted

billion

750

Administration of $58.696 Justice billion

$ 54 billion

$62.016 billion

800

General Government

$31.149 billion

$27 billion

$31.763 billion

900

Net Interest

$241.598 billion

$256 billion

$224.784 billion

920

Allowances

$6.566 billion $-3 billion

$0.125 billion

950

Undistributed Offsetting Receipts

$-99.635 billion

$-100 billion

$-98.897 billion

The Union Budget of India, referred to as the annual Financial Statement in Article 112 of the Constitution of India, is the annual budget of the Republic of India, presented each year on the last working day of February by the Finance Minister of India in Parliament. The budget has to be passed by the House before it can come into effect on April 1, the start of India'sfinancial year. Former Finance Minister Morarji Desai presented the budget ten times, the most by any. The Union Budget of India for 2012 - 2013 was presented by Pranab Mukherjee, the Finance Minister of India on 16th March 2012 ,this was the 7th budget of his career . These budgetary proposals would be applicable from 1 April 2012 to 31 March 2013.

Chronology Pre-liberalisation:The first Union budget of independent India was presented by R. K. Shanmukham Chetty on November 26, 1947. The Union budgets for the fiscal years 1959-60 to 1963-64, inclusive of the interim budget for 1962-63, were presented by Morarji Desai. On February 29 in 1964 and 1968, he became the only finance minister to present the Union budget on his birthday. Vyas presented budgets that included five annual budgets, an interim budget during his first stint and one interim budget and three final budgets in his second tenure when he was both the Finance Minister and Deputy Prime Minister of India. After desai's resignation, Indira Gandhi, the then Prime Minister of India, took over the Ministry of Finance to become the only woman to hold the post of the finance minister. Pranab Mukherjee, the first Rajya Sabha member to hold the Finance portfolio, presented the annual budgets for 1982-83, 198384 and 1984-85. Rajiv Gandhi presented the budget for 1987-89 after V P Singh quit his government, and in the process became only the third Prime Minister to present a budget after his mother and grandfather. N. D. Tiwary presented the budget for 1988-89, S B Chavan for 1989-90, while Madhu Dandawate presented the Union budget for 1990-91. Dr. Manmohan Singh became the Finance Minister but presented the interim budget for 1991-92 as elections were forced. Due to political developments, early elections were held in May 1991 following which the Indian National Congress returned to political power and Manmohan Singh, the Finance Minister, presented the budget for 1991-92.

Post-liberalisation:-

Manmohan Singh, in his next annual budgets from 199293, opened the economy,encouraged foreign investments and reduced peak import duty from 300 plus percent to 50 percent. After elections in 1996, a non-Congress ministry assumed office. Hence the final budget for 1996-97 was presented by P. Chidambaram, who then belonged to Tamil Maanila Congress. Following a constitutional crisis when the I. K. Gujral Ministry was on its way out, a special session of Parliament was convened just to pass Chidambaram's 1997-98 budget. This budget was passed without a debate. After the general elections in March 1998 that led to the Bharatiya Janata Party forming the Central Government, Yashwant Sinha, the then Finance Minister in this government, presented the interim and final budgets for 1998-99. After general elections in 1999, Sinha again became the finance minister and presented four annual budgets from 1999-2000 to 2002-2003. Due to elections in May 2004, an interim budget was presented by Jaswant Singh.

Time of Budget Announcement

Until the year 2000, the Union Budget was announced at 5 pm on the last working day of the month of February. This practice was inherited from the Colonial Era, when the British Parliament would pass the budget in the noon followed by India in the evening of the day. It was Mr.Yashwant Sinha, the then Finance Minister of India in the NDA government (led by BJP) of Atal Bihari Vajpayee, who changed the ritual by announcing the 2001 Union Budget at 11 am.

Stages in Budget Enactment

The budget goes through the following six stages in the parliament. *Presentation of the budget on the floor of the House before the LS. *General discussion on the budget *Vote on account *Scrutiny by departmentally related standing committees *Voting on demands for grants. *Passing of appropriation bill (art. 114 of the Constitution of India) *Passing of finance bill( under rule 219 of the lok sabha).