The Union budget is not just the first draft of the nation's economic history; budget documents are perhaps the best source to decipher the political economy of an era. Behind the document is a long and complex policymaking process.
1. The initial process involves collating receipts and expenditure from various ministries, ahead of revising the budget estimates for the year. Meanwhile, the economic division begins work on studying the macroeconomic backdrop.
2. By November, the finance ministry initiates discussions with various stakeholders, such as industry lobby groups and farm representatives, for their points of view or wish lists, as the case may be. Simultaneously, the officials in the ministry of finance ready the ground before the finance minister begins the first of his four meetings.
3. This year, given the exceptional economic circumstances, the government has had to take a view on the massive economic stimulus that it had undertaken after the onset of the global meltdown. Due to the enormous pressure on the fiscal deficit, there is an argument that the stimulus should be partially rolled back.
4. Confidentiality is a key part of budget preparations. The finance ministry has installed CCTV (closed-circuit television) cameras as an additional precaution. Despite the use of digital technology in budget preparation, the finance ministry has never witnessed a breach of security--an enviable record.
5. For the final week, some of the officials involved in the preparation of the budget are locked in with little or no contact permitted with the outside world.
6. Two days before the budget speech, officers of the Press Information Bureau, the government's public relations wing, enter the picture. A team of around 20 officials prepares press releases in three languages-English, Hindi and Urdu. These officials are also held in quarantine till the time the speech is delivered. The cabinet gets to see a gist of the budget 10 minutes before Parliament meets on budget day.
UNION BUDGET DOCUMENTS
A guide to the Union budget documents The Union budget lists the major heads of earning and spending for the Union government. This includes all sources of funding such as tax revenues and borrowings as well as government spending.
1. Annual Financial Statement- A statement of estimated receipts and expenditure for the fiscal year.
2. Budget at a glance.
3. Budget Speech.
4. Budget Highlights.
5. Outcome budget.
6. Receipts budget.
7. Finance Bill, with custom and excise notifications- Deals in imposition of taxes.
8. Appropriation Bill- Expenditure Bill which is voted by the Lok Sabha.
9. Demand for Grants- Estimates of expenditure, which is voted by the Lok Sabha.
10. Fiscal responsibility and budget management statements- Sets three year targets for fiscal indicators such as fiscal deficit.
11. Explanatory memorandum- Explains provisions of the Finance Bill.
Typically, after the presentation of the budget on the last day of February, Parliamentary Standing Committees examine the government's expenditure claims.
The budget is also scrutinized by the Comptroller and Auditor General, who is expected to submit his report by the end of the calendar year, as well as by the public accounts committee. All taxes, revenues, grants, loans, repayments, proceeds from loans floated by the government and advances from the Reserve Bank of India go into the Consolidated Fund of India. These are voted funds, that is, they are put to vote in Parliament. Nothing can be put in or taken out of here without Parliament's permission.
Thus, the railway budget is also a part of the Consolidated Fund. All other public money, such as small savings, go into the Public Account of India. These are called charged funds, and don't belong to the government, which means they don't have to be voted on and can simply be discussed. The annual financial statement shows the expenditure charged on the Consolidated Fund.
GLOSSARY
Gross Domestic Product (GDP): The added value of output of all productive sectors in the economy as measured by the Central Statistical Organization (CSO).
Fiscal Deficit: This is the total new borrowings made by the government every year to meet the gap between its income and expenditure. Thus, the fiscal deficit is the gross addition to the government's domestic debt burden.
Revenue Deficit: This measures the gap between the government's current income through taxes and other revenues, and its spending for the year.
Capital and Revenue Budgets: Expenditure that doesn't create an asset, such as subsidies and interest payments, is classified as revenue expenditure. Conversely, spending to create an asset such as land or buildings, and loans given by the Centre to the states is capital spending. Such expenditure is balanced against receipts, which comprise tax collections, interest and dividend on Union government investments, and others on the revenue side, and loans raised by the Centre on the capital side.
Plan and Non-Plan Expenditure: Plan spending includes the annual funds allocated by the Union government for development schemes outlined in the ongoing Five-year Plan, while the expenditure incurred on maintenance of the projects already created is accounted for under non-Plan spending. Both these spending have capital and revenue components.
Outcome Budget: A practice started by former finance minister P. Chidambaram in 2005 to improve the accountability of fund utilization by the various arms of the government, these attempts to give a detailed account of the performance of all major programmes outlined in the main budget and implemented by all the Union ministries.
Source- www.livemint.com
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