Sample Material of Our IAS Mains GS Online Coaching Programme
Subject: General Studies (Paper 3 - Technology, Economic
Development, Bio diversity, Environment, Security and Disaster Management)
Topic: Government Budgeting
Key To Budget Documents e.g. Budget 2013-2014
The Budget documents presented to Parliament comprise,
besides the Finance Minister’s Budget Speech, the following:
Annual Financial Statement (AFS)
Demands for Grants (DG)
Memo randum Explaining the Provisions in the Finance Bill,
Macro-economic framework for the relevant financial year
Fiscal Policy Strategy Statement for the financial year
Medium Term Fiscal Policy Statement
Medium Term Expenditure Framework Statement
Expenditure Budget Volume-1
Expenditure Budget Volume-2
Budget at a glance
Highlights of Budget
Status of Implementation of Announcements made in Finance
Minister’s Budget Speech of the previous financial year.
The documents shown at Serial A, B, C and D are mandated by
Art. 112,113, 114(3) and 110(a) of the Constitution of India respectively, while
the documents at Serial F, G, H and I are presented as per the provisions of the
Fiscal Responsibility and Budget Management Act, 2003. Other documents are in
the nature of explanatory statements supporting the mandated documents with
narrative or other content in a user friendly format suited for quick or
In addition to the above , individual Departments/Ministries
also prepare and present to Parliament their Detailed Demands for Grants,
Outcome Budget, and their Annual Reports.
The Economic Survey which highlights the economic trends in
the country and facilitates a better appreciation of the mobilization
of resources and their allocation in the Budget is brought out by the Economic
Division of Department of Economic Affairs, Ministry of Finance. The Economic
Survey is presented to Parliament in advance of the Union Budget.
To monitor the performance management of various
Ministries/Departments, Result Framework Document (RFD) system has been adopted
by the Government. The RFD system is being implemented in the various
Ministries/Departments in phased manner. RFD was implemented to 59 Ministries /
Departments for the year 2009- 10, 62 Ministries/Departments prepared RFD
for the year 2010-11, 74 Ministries/Departments prepared the RFD in 2011-12
Ministries/Departments prepared the RFD during 2012-13.
Performance Management in the Government is a new concept which determines the
performance index based upon the agreed objectives, policies, programs and
projects/schemes. To ensure the success in achieving the agreed objectives and implementing agreed policies, programs and projects, the RFD
also includes a commitment for required resources and necessary operational
A brief description of the Budget documents is given below.
(A) Annual Financial Statement (AFS):
the document as
provided under Article 112, shows estimated receipts and expenditure of the
Government of India for 2013-14 in relation to estimates for 2012-13 as also
expenditure for the ye a r 20 11-1 2. The receipts and disbursements
are shown under the three parts, in which Government Accounts are kept viz.
(i) Consolidated Fund,
(ii) Contingency Fund and
(iii) Public Account.
Under the Constitution, Annual Financial Statement
distinguishes expenditure on revenue account from other expenditure. Government
Budget, therefore, comprises Revenue Budget and Capital Budget. The estimates of
receipts and expenditure included in the Annual Financial Statement are for the
expenditure net of refunds and recoveries, as will be reflected in the accounts.
The significance of the Consolidated Fund, the Contingency
Fund and the Public Account
(i) The existence of the Consolidated Fund
of India (CFI) flows from Article 266 of the Constitution. All revenues
received by Government, loans raised by it, and also its receipts from
recoveries of loans granted by it form the Consolidated Fund. All
expenditure of Government is incurred from the Consolidated Fund of India
and no amount can be drawn fro m the Consolidated Fund without
authorization from Parliament.
(ii) Article 267 of the Constitution authorizes the Contingency Fund of India which is at present placed at the
disposal of the President o f India to facilitate Government to meet
urgent unforeseen expenditure pending authorization from Parliament.
Parliamentary approval for such unforeseen expenditure is obtained,
post-facto, and an equivalent amount is drawn from the Consolidated Fund to
recoup the Contingency Fund. The corpus of the Contingency Fund as
authorized by Parliament presently stands at Rs. 500 crore.
(iii) Moneys held by Government in Trust as
in the case of Provident Funds, Small Savings collections , income
of Government set apart for expenditure on specific objects like road
development, primary education, Reserve/Special Funds etc. are kept in the
Public Account. Public Account funds do not belong to Government and have to
be finally paid back to the persons and authorities who
Parliamentary authorization for such payments is,
therefore, not required, except where amounts are withdrawn from the Consolidated
Fund with the approval of Parliament and kept in the Public Account for
expenditure on specific objects, in which case, the actual expenditure on
the specific object is again submitted for vote of Parliament for withdrawal
from the Public Account for incurring expenditure on the specific object.
(iv) Revenue Budget consists of the revenue
receipts of Government (tax revenues and other revenues) and the expenditure
met fro m the se revenues. Tax revenues comprise proceeds of taxes and
other duties levied by the Union. The estimates of revenue receipts shown in
the Annual Financial Statement take into account the effect of various
taxation proposals made in the Finance Bill.
Other receipts of Government
mainly consist of interest and dividend on investments made by Government,
fees, and other receipts for services rendered by Government. Revenue
expenditure is for the normal running of Government departments and various
services, interest payments on debt, subsidies , etc. Broadly , the
expenditure which does not result in creation of assets for Government of
India is treated as revenue expenditure.
All grants given to State
Governments/ Union Territories and other parties are also treated as revenue
expenditure even though some of the grants may be used for creation of
(v) Capital Budget consists capital receipts and capital payments. The
capital receipts are loans raised by Government from public, called market
loans, borrowings by Government from Reserve Bank and other parties through
sale of Treasury Bills, loans received from foreign Governments and bodies,
disinvestment receipts and recoveries of loans from State and Union
Territory Governments and other parties.
Capital payments consist o f capital expenditure on acquisition of assets
like land, buildings, machinery, equipment, as also investments in shares,
etc., and loans and advances granted by Central Government to State and
Union Territory Governments, Government companies, Corporations and other
• The estimates of receipts and
disbursements in the Annual Financial Statement and of
expenditure in the Demands for Grants are shown according to the accounting
classification prescribed under Article 150 o f the Constitution, which
enables Parliament and the public to make a meaningful analysis of
allocation of resources and purposes of Government expenditure.
• The Annual Financial Statement shows
separately, certa in disbursements as charged on the Consolidated Fund of
India, where the Constitution mandates such items of expenditure, like
emoluments of the President, salaries and allowances of the
Chairman and the Deputy Chairman of the Rajya Sabha and the Speaker and
the Deputy Speaker of the Lok Sabha, salaries, allowances and pensions of
Judges of the Supreme Court, Comptroller and Auditor-General of India and
the Central Vigilance Commission, interest on and repayment of loans raised
by Government and payments made to satisfy decrees of courts etc. These
items of expenditure are charged on the Consolidated Fund
India and are not required to be voted by the Lok Sabha.