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This is Budget time again when Union Finance minister presents budget in the Parliament. Therefore, I wish to throw light on the framework of the Union Finance Budget documents which may be helpful to my friends.

Main Budget Documents – consists of 4 documents required by the Indian Constitution and remaining 3 documents required by FRBM Act, 2003

Required by Indian Constitution

1. Annual Financial Statement
2. Demand for Grants
3. Appropriation Bill
4. Finance Bill

Required by Fiscal Responsibility and Budget Management Act, 2003 (FRBM Act)

5. Macro economic Framework for the relevant year
6. Fiscal Policy Strategy Statement; and
7. Medium Term Fiscal Policy Statement

1. Annual Financial Statement (AFS)

This contains the estimated disbursements and receipts for the financial year.
The estimates are shown under three heads - Consolidated Fund, Contingency Fund and Public Account.

The AFS also shows separately Revenue Budget and Capital Budget. Each of the above terms are explained as follows:

1. Consolidated Fund - Includes all revenue received, loans raised and loans recovered. All government expenditure is met from Consolidated Fund.

2. Contingency Fund - This fund is at the disposal of the President. This Rs.500 crore emergency fund is for meeting contingencies when they arise. Requires authorization from Parliament.

3. Public Account - Money held in Provident Fund and other trusts. Requires authorization from Parliament.

4. Revenue Budget - Receipts from taxes and other revenues and expenditure made out of this.

5. Capital Budget - Selling shares of PSU's, borrowing loans from public, sale of treasury bills, borrowings from RBI, and Capital Expenditure out of this.

2. Demand for Grants

Expenditure estimates for different ministries are presented in Demand for Grants. Each demand gives details of voted expenditure (to be voted by Lok Sabha) and charged expenditure (charged directly to Consolidated Fund like emoluments of President and not to be put on vote).

This also contains bifurcation showing Plan Expenditure (Plans of States and Union Territories) and Non-Plan Expenditures (Interest, Subsidies, Salaries, Defence and Pension). The above expenditure is further bifurcated into Capital and Revenue heads.

3. Appropriation Bills

Parliament's approval for withdrawal of money for voted and charged expenditure as presented by Demand for Grants is sought through the Appropriation Bills.

4. Finance Bills

It places new proposals in taxation or changes in existing taxation provisions before the approval of the Parliament and is accompanied by a Memorandum where tax provisions are explained. This is the most important part of the Budget where Finance Professionals are interested.

5. Macro Economic Framework Statement

Assessment of GDP growth, Fiscal balance of the government and the external sector balance of the economy.

6. Fiscal Policy Strategy Statement

This outlines the government priority in the fiscal area covering taxation, expenditure, lending and investment, administered pricing, borrowing and guarantees. The thrust is upon sound fiscal management principles while drawing out policies.

7. Medium Term Fiscal Policy Statement

The three year target for revenue deficit, fiscal deficit, Tax to GDP ratio and total outstanding debt at the yearend are detailed out in this statement. GDP is taken at market prices to compute revenue deficit, fiscal deficit and tax to GDP ratio.


Published by

CA.Sidhartha S Pillai
(Chartered Accountant)
Category Others   Report

1 Likes   49 Shares   13521 Views


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