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COMPONENT OF THE GOVERNMENT BUDGET
MACRO
ECONOMICS/PUBLIC FINANCE
Ø MEANING OF GOVERNMENT BUDGET
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STATEMENT OF THE ESTIMATES OF THE GOVERNMENT
RECEIPTS AND GOVERNMENT EXPENDITURE DURING THE PERIOD OF THE FINANCIAL YEAR.
THE BUGET REVEALS:-
•
THE FINANCIAL PERFORMANCE OF THE GOVT OVER THE
PAST ONE YEAR AND
•
THE FINANCIAL PROGRAMMES AND POLICIES OF THE
GOVT FOR THE NEXT YEAR
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GOVT BUDGET IS BASICALLY AN ANNUAL EXERCISE
RELATING TO REVENUE AND EXPENDITURE POLICY OF THE GOVT.
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BUDGET OF THE CENTRAL AND STATE GOVT
1.
112 OF THE CONSTITUTION REQUIRES THE CG TO
PREPARE ANNUAL FINANCIAL STATEMENT FOR THE COUNTRY AS A WHOLE. IT IS PRESENTED
BEFORE THE LOK SABHA AND RAJYA SABHA
2.
ARTICLE 202 OF THE CONSTITUTION REQUIRE EVERY
STATE TO PREPARE THE BUDGET AND PRESENT BEFORE STATE LEGISLATIVE ASSEMBLY.
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COMPONENT(STRUCTURE) OF THE BUDGET
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TWO BROAD COMPONENTS:-
1.
REVENUE ACCOUNT ---REVENUE RECEIPTS AND REVENUE
EXPENDITURE
2.
CAPITAL ACCOUNT------CAPITAL RECEIPTS AND
CAPITAL EXPENDITURE
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TWO BROAD COMPONENTS:-
1.
BUDGET RECEIPTS:- ESTIMATED MONEY RECEIPTS OF
THE GOVT FROM ALL SOURCES DURING THE FISCAL YEAR AND IT INCLUDES REVENUE
RECEIPTS AND CAPITAL RECEIPTS
2.
BUDGET EXPENDITURE:- ESTIMATED EXPENDITURE
RELATED TO ITS DEVELOPMENT AS WELL NON DEVELOPMENT PROGRAMS
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REVENUE RECEIPTS
1.
TAX RECEIPTS
2.
NON TAX RECEIPTS
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MEANING OF REVENUE RECEIPTS
u FEATURES OF REVENUE RECEIPTS:-
1.
THESE RECEIPTS DON'T CREATE ANY CORRESPONDING LIABILITY FOR THE
GOVERNMENT
2.
DO NOT CAUSE ANY REDUCTION IN THE ASSETS OF THE GOVERNMENT
·
TAX RECEIPTS
·
TAX IS A COMPULSORY PAYMENT TO THE GOVT
·
THESE ARE CLASSIFIED AS :-
1.
PROGRESSIVE AND REGRESSIVE TAXES
2.
VALUE ADDED AND SPECIFIC TAXES
3.
DIRECT AND INDIRECT TAX
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PROGRESSIVE AND REGRESSIVE TAX
1.
PROGRESSIVE TAX:- RATE OF TAX INCREASES WITH
INCREASE IN INCOME
2.
REGRESSIVE TAX:- IT CAUSES A MORE BURDEN ON THE
POOR THAN THE RICH
3.
VALUE ADDED TAX
4.
SPECIFIC TAX
5.
DIRECT TAX:-THE FINAL BURDEN OF WHICH IS BORNE
BY THE PERSON ON WHOM IT IS IMPOSED
6.
INDIRECT TAX WHICH CAN BE SHIFTED TO OTHER PERSONS
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NON TAX RECEIPTS
1.
FEES
2.
FINES
3.
ESCHEAT :- LEAVE PROPERTY WITHOUT A LEGAL HEIR.
GOVT MAKES REVENUE OUT OF IT.
4.
SPECIAL ASSESSMENT
5.
INCOME FROM PUBLIC ENTERPRISES
6.
GRANTS AND DONATIONS
·
CAPITAL RECEIPT
o
CREATE A LIABILITY FOR THE GOVT:- LOANS TO THE
GOVT
o
CAUSE REDUCTION IN THE ASSETS OF GOVT
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MAY BE DEFINED AS THOSE RECEIPTS OF THE GOVT
WHICH EITHER CREATE A LIABILITY FOR THE GOVT OR CAUSE A REDUCTION IN ITS
ASSETS.
·
CAPITAL RECEIPT :-
I.
RECOVERY OF LOAN
II.
BORROWING
AND OTHER LIABILITIES:-
a)
GENERAL PUBLIC
b)
RBI
c)
REST OF THE WORLD
III. OTHER RECEIPT : DISINVESTMENT
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BUDGET EXPENDITURE
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ESTIMATED EXPENDITURE OF THE GOVT RELATING TO
ITS DEVELOPMENT AS WELL AS NON DEVELOPMENT PROGRAMMES DURING THE FISCAL YEAR.
a)
REVENUE EXPENDITURE
b)
CAPITAL EXPENDITURE
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REVENUE EXPENDITURE
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DOES NOT CREATE ANY ASSETS FOR THE GOVERNMENT
:-
•
OLD AGE PENSION
•
SALARIES AND SCHOLARSHIP
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DOES NOT CREATE ANY REDUCTION IN THE LIABILITY
OF THE GOVT—GRANTS TO COPE UP WITH NATURAL CALAMITIES
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IMPORTANT ITEMS OF REVENUE EXPENDITURE
a)
WAGE BILL OF THE GOVERNMENT
b)
INTEREST PAYMENTS
c)
EXPENDITURE ON SUBSIDIES
d)
DEFENCE PURCHASE
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CAPITAL EXPENDITURE
a)
IT CREATES ASSETS FOR THE GOVT
b)
REDUCTION OF LIABILITY
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IMPORTANT ITEMS OF CAPITAL EXPENDITURE:-
a)
EXPENDITURE ON LAND AND BUILDING
b)
ON MACHINERY AND EQUIPMENT
c)
PURCHASE OF SHARES
d)
LOANS BY CG TO SG
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PLAN AND NON PLAN EXPENDITURE
u PUBLIC EXPENDITURE( REVENUE + CAPITAL
EXPENDITURE) IS ALSO CLASSIFIED AS PLAN AND NON PLAN EXPENDITURE
u PLAN EXPENDITURE:-
a)
SPECIFIED PLANS AND PROGRAMMES OF DEVELOPMENT OR
b)
ASSISTANCE OF THE CG TO SG
c)
INCLUDES BOTH REVENUE AS WELL AS CAPITAL EXPENDITURE
u NON PLAN EXPENDITURE :- WHICH IS NOT
RELATED TO SPECIFIC PLANS AND PROGRAMMES OF DEVELOPMENT AS WELL AS NOT RELATED
TO ASSISTANCE OF CG TO SG
u TOTAL GOVT EXPENDITURE=REVENUE
EXPENDITURE+CAPITAL EXPENDITURE OR (PLAN EXPENDITURE+NON PLAN EXP)
