The government's annual budget exercise is no different from the waywe all manage our household budgets. The only difference: the former'sintimidating jargon. Team ET simplifies the important budget items forits readers in a five-part series. We have, however, departed from theusual way glossaries are presented, in alphabetical order, to a flow-typeformat wherein terms are explained as the reader would encounterthem in the budget. Read on
ON the budget day, the finance minister tables 10-12 documents. Of these, the mainand most important document is the Annual Financial Statement.
ANNUAL FINANCIAL STATEMENT:
Article 112 of the constitution requires the government to present to the Parliament astatement of estimated receipts and expenditure in respect of every financial year,April 1 to March 31. This statement is the annual financial statement.The annual financial statement is usually a white 10-page document. It is divided intothree parts, Consolidated Fund, Contingency Fund and Public Account. For each of these funds the government has to present a statement of receipts and expenditure.
This is the most important of all the government funds. All revenues raised by thegovernment, money borrowed and receipts from loans given by the government flowinto the consolidated fund of India. All government expenditure is made from thisfund, except for exceptional items met from the Contingency Fund or the PublicAccount. Importantly, no money can be withdrawn from this fund withoutParliament's approval.
As the name suggests, any urgent or unforeseen expenditure is met from this fund.The Rs 500-crore fund is at the disposal of the President. Any expenditure incurredfrom this fund requires a subsequent approval from Parliament and the amountwithdrawn is returned to the fund from the consolidated fund.
This fund is to account for flows for those transactions where the government ismerely acting as a banker. For instance, provident funds, small savings and so on.These funds do not belong to the government. They have to be paid back at some timeto their rightful owners. Because of this nature of the fund, expenditure from it are notrequired to be approved by Parliament.For each of these funds the government has to present a statement of receipts andexpenditure. It is important to note that all money flowing into these funds is called