The Fiscal Budget

By
Hitesh I. Bhatia Assistant Professor (Economics) Navrachana University Vadodara, Gujarat
Mbl - 09825484126 Hitesh262004@yahoo.com

 The word budget has been derived from the French word bougette which means a small leather bag.

It symbolizes a bag containing the financial proposals. This term of budget used for the annual financial plans of government dates back to 1773.

Definition
A budget is a master financial plan of government. It presents the estimates of forthcoming revenue and proposed expenditure of the period simultaneously Philip Taylor

Budget at a Glance
2010-2011 Actuals 2011-2012 Budget Estimates 2011-2012 Revised Estimates 2012-2013 Budget Estimates

Every budget statement has got at least three sets of figures: Actual figures for preceding year Budget and revised figures of the current year Budget estimates for the following year.

Government Expenditure

Plan Expenditure

Non-plan Expenditure

Capital Expenditure

Revenue Expenditure

Plan Expendituremeans estimated expenditure provided in the budget on various programmes less than five year plan.

Non-Plan Expendituremeans estimated expenditure provided in budget on routine functioning of the government. For e.g., subsidies, salaries, defence, etc.

Revenue ExpenditureCapital Expendituremeans the expenditure means the expenditure which does not create which creates assets assets or reduce or reduces liabilities. liabilities. Its recurring Its non recurring in in nature. nature.

2010-2011 2011-2012 2011-2012 Actuals

20122013

Budget Revised Budget Estimates Estimates Estimates

Plan & Non-Plan Expenditure

Developmental Expenditure
1.Social Expenditure Medical and Public Health Education, Housing and Sanitation Social and Family Welfare Programmes 2. Economic Expenditure Agriculture Industry Transportation and Communication Energy and Minerals

Non-Developmental Expenditure
Defense Public Administration Police and Judiciary Tax collection Interest on Public Debt Subsidies

Government Receipts

Revenue Receipts

Capital Receipts

Tax Revenue & Non-tax Revenue

Recovery of loans Borrowings Other Receipts

Interest and Receipts Dividend and Profit Other Monetary Receipts Grants and Aids

Tax Revenue

Sources of Governments Revenue Taxes levied by Central Government Personal Income Tax Corporation Tax Custom Duty Central Excise Service Tax
Taxes levied by State Governments Taxes on Income Agricultural Income Tax Profession Tax % share in Income Tax. Taxes on Property Land Revenue Estate Duty Stamps and Registration Fees Taxes on Commodities Sales Tax Excise Duties Entertainment Tax

 Direct Taxes Taxes, whose incidence cannot be shifted from tax payers to other persons, are known as Direct taxes such as Income tax and Wealth tax. Sources of Direct Taxes (i) Income tax (ii) Corporation tax (iii) Profession tax (iv) Agricultural income tax (v) Wealth tax (vi) Estate Duty (vii) Land revenue (viii) Registration and license fee.

Indirect Taxes Taxes, whose incidence is shifted from tax payer to other persons is known as Indirect tax. Sources of Indirect Tax (i) Sales tax (ii) Excise (iii) Customs

Budget

Balanced Budget

Unbalanced budget

Surplus Budget

Deficit budget

1. Revenue deficit 2. Fiscal Deficit 3. Primary Deficit 4. Budgetary Defici

2010-2011 2011-2012 2011-2012 Actuals

20122013

Budget Revised Budget Estimates Estimates Estimates

Balanced Budget- total government expenditure and governments revenue is equal.

Unbalanced Budget- Total of Governments expenditure and revenues are not equal.

Surplus Budget- Total government receipts are more then its expenditure.

Deficit Budget- Total government receipts are less then its expenditure.

Primary Deficit- it means Budgetary Deficit- a state Fiscal deficit minus Interest in which total government payments. expenditure is more than total receipts

Fiscal Budget
When total governments expenditure is more then its total receipts (both capital and revenue) excluding borrowings. This shows the extent to which government will have to depend upon borrowings to meet its expenditure.

1. GDP is estimated to grow by 6.9% in 201112, after having grown at 8.4% in preceding two years. 2. Key reasons for the interruption of Indian economy: euro zone crisis, economy, political turmoil in Middle East and rise in crude oil price. 3. Growth moderated due to tight monetary policy. 4. Economy is turning around as core sectors and manufacturing show signs of recovery.

1. Current account deficit at 3.6% of GDP for 2011-12. 2. Fiscal deficit for 2012-13 pegged at Rs 5,13,590 crore, which is 5.1 per cent of GDP against 5.9% in FY 2011-12 3. Efforts to keep central subsidies under 2% of GDP in 2012-13. Over next 3 year, to be further brought down to 1.75%. 4. For 2012-13, Rs 30,000 crore to be raised through disinvestment.

Thank You
Hitesh I. Bhatia Assistant Professor (Economics) Navrachana University Vadodara, Gujarat
Mbl - 09825484126 Hitesh262004@yahoo.com