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PRESENTED BY Dr. Umesh Mishra (11) Dr. Anita Chaudhery (02) Dr. Rashmi Dwivedi (07)
Indian central Budget
The Union Budget of India also called the general India budget is presented each year on the last working day of February. The budget is presented by the Finance Minister of India in Parliament. Budget is most economic event in the country which outlines all the economic planning of the Government of India for the next year. It is not only important for corporates but for individuals from all sections of the society.
Origin and History
The first general budget of India was presented by the India's first Finance Minister Sir R.K. Shanmugham Chetty on November 26, 1947. Since then, 28 Union Finance Ministers have been presenting the budget every year. Initially, much attention was given to the agricultural sector but as later on, the focus shifted to the other sectors including the industrial, financial and other sectors.
State Level Budget
Each state government maintains its own budget, prepared by the state's minister of finance in consultation with appropriate officials of the central government. • Primary control over state finances rests with the state legislature in the same manner as at the central government level. • State finances are supervised by the central government, however, through the Comptroller and the Auditor General of India; the latter reviews State Government accounts annually and reports the findings to the appropriate state governor for submission to the State's Legislature. • The Central and State Budgets consist of a budget for current expenditures, known as the budget on revenue account, and a capital budget for economic and social development expenditures.
Separate Budget for Railway and Postal Department • The Indian Railways, the largest Public-Sector Enterprise, and the Posts and Telegraph Departments have their own budgets, funds, and accounts. • The appropriations and disbursements under their budgets are subject to the same form of parliamentary and audit control as other government revenues and expenditures.
•If by April 1. the parliamentary discussion of the budget has not been completed. Procedure For Passing of Budget •The annual India budget has to be passed by the House of the parliament before it can come into effect on April 1. the start of India's financial year. •The Indian parliament has one month to review and modify the government's budget proposals.org 6 . the budget as proposed by the minister of finance goes into effect and subject to retroactive modifications after the parliamentary yerramraju@prmia.
Once the GAA is approved. This serves as the effective budget until such time as the GAA is approved in law. the House 1 budget is backed-out and the GAA figures are loaded to reflect the current fiscal year original budget. . ANF may choose to allot funds for spending as necessary using the House 1 budget figures supported by an adopted interim budget.Central Budget Structures Overview • The House 1 budget is loaded prior to the beginning of the fiscal year. If the GAA is adopted late.
Projected Federal Spending Under One Fiscal Scenario (Percentage of gross domestic product) .Health budget • The federal budget is on an unsustainable path. primarily because of the rising cost of health care.
to include oversight of department/college budgets. advice on proper use of State funds. Project Authorizations.e. permanent new funds. timely processing of budget documents. administration and reporting. one-time funds. and effective reporting of expenditures and revenue. This includes preparation and loading of the campus budget. Budget Office! • Mission To provide prompt and accurate financial services to the University.). • Responsibilities The Budget Office is responsible for budget planning. monitoring expenditures. original. setting up new accounts. assisting . etc. (i. Professional Development Grants. logging and verifying Personnel Transaction Forms.
• Seek from faculty. consider the budget reduction to occur over a several year period by thoughtfully employing this year’s resources in light of likely future cuts. but prudent. and/or areas of work that can be reduced. been broadly shared. including the Budget Council. • Employ significant. and administrators recommendations on possible cost saving efficiencies from business practices. and feedback received from various groups. the Administrative Council. slowed. the Faculty Senate. contracts that could be dropped or renegotiated. • As much as practical. or eliminated. share of the University Contingency Reserve in making budget reductions. and union representatives. staff. in the past. . PRINCIPLES FOR BUDGET CUTS • Most of these “principles” have. as well as in open sessions for faculty and staff.
reductions in course choice and timing are likely. safeguard faculty and staff in permanent positions. as well as other strategies. however. including possible website advertising. . • Continue to position the University for the future by making select program investments in accord with the University Strategic Plan. to the extent possible.• To the extent practicable. international enrollments. • Depending on the size of the budget cut. revenue from outsourcing and any CSU approved student fee increase. protect the ability of students to make normal degree progress. • Pursue revenue enhancements and diversifying the University’s resource streams by increasing gifts and contributions. grants and contracts.
• To assure there are no division budget reductions that place unacceptable burdens on other divisions. curtail adoption and implementation of new programs. . discuss the impact of budget cuts before recommending them. • Keep an inventory of cuts and other accommodations so that consideration may be given to restoring funding in the future. where new investments are necessary.• In the near term. offsetting savings from current programs are likely to be required.
• Reduce general operating expenses.POSSIBLE BUDGET REDUCTION STRATEGIES • Reduce and/or delay equipment purchases.. ..g. • Closely review all service contracts—e. • Reduce work schedules if employees prefer. e. and special consultants. Hershey. Hobson. Oracle—and all organizational memberships. • Freeze vacant positions.g. • Reduce general fund supported travel. 12 months to 10 month employment and voluntary furloughs. stipends.
. . programs.g. reduced operating hours and adjusted lighting and temperature levels. Review all appliance usage and costs.• Emphasize recycling and energy savings. and offices. • Combine organizational units to achieve efficiencies and/or where there is overlapping of responsibilities. • Reduce assigned time and/or sabbaticals. and possibly deny sabbaticals shorter than one year. e. including colleges. divisions. • Defer maintenance that doesn’t put the campus at serious risk.
health center. • Review and adjust as appropriate the opening hours of the library.• Reduce workforce. . where applicable. • Suspend or eliminate low enrollment and other programs. • Hold retreats and other university events on campus. and other service units. computer labs. within collective bargaining agreement rules.
. • Review and adjust as needed the number of positions in administrative offices. • Scale back student recruitment and other outreach efforts.• Reduce FTES target.
Know the Budget • • • • • The Economy – Survey 2008-09 What is Budget? How is budget formulated? Budget assumptions Budget Proposals – In nutshell .
Key Figures from the 2009/10 Federal Budget of Republic of India And Export Highlights .
Budget Facts • Final Budget for Year 2009-2010 • Presented By Honb. Finance Minister Mr. Pranab Mukharji • Put on Desk as on 6th July . 2009 .
Rs.21.$ 1 Trillion • Population :.53.15 Billion • GDP 2008-09 :.1.Open Economy ** • Size of Economy :.Key Facts of Economy • Name of Economy :.753 crore .Republic of India • Type of Economy :.
0% .7 % • Target was set at 9.0% for 2008-09 • Slowest Growth rate in 6 years • Target set for 2009-10 is 8.Growth Rate • Growth Achieved in 2008-09 ( Non Audited ) is 6.
6.01 Trillion Total Expenditure :.4.Budget Estimates for 2009-10 • • • • • • • Total Receipts :. 10.96 Trillion .Rs.Rs.Rs.Rs. 10. 6. 4.Rs. 3.06 Trillion Borrowings & Liabilities :.Rs.21 Trillion Plan Expenditure :.Rs.21 Trillion Revenue Receipts :.14 Trillion Capital Receipts :.25 Trillion Non Plan Expenditure :.
” Arthasasthra. economic and spiritual resources of various sections of people in the service of the common good of all.“ Democracy is the art and science of mobilising the entire physical. Kautilya quoted by the FM in Budget speech .
Electricity:2.3%.7% of GDP – Predicted growth -7. .Economic Survey • The Economy sees signs of revival – Growth at 6.8% of GDP (07-08) • Investment rate 39.3% of GDP (07-08) • Households covered under NREGP 4cr • Dip in Private consumption • Dip in Exports significantly.4% -Mfr: 2.6% – Industrial growth: 2.75% subject to global economic recovery – Agri growth 1.3%. Mining:2.8% – Credit – 17.3% Savings rate 37.
growth was just 2.8% 1.4% of large projects ahead of schedule while 50.The Survey adds… • • • • • • • Growth path takes a U-shape Tax structure may be simplified Support for commodity derivatives market Higher FDI in Insurance could be proposed PSU disinvestment may be pushed Fiscal Deficit 4.7% are delayed • Power sector in Govt.3% while in private sector 12.1% • Reform subsidies .
with in-built preference for long term borrowing.securitiies by FIIs HNIs could be allowed to register and invest directly through authorised Indian Investment intermediaries Align voting rights in Banks with equity holdings Allow trading of direct credit obligations among banks and other financial institutions Link small savings rates of interest to government debt instruments or bank deposit rates of similar maturity. auction of rights to invest in govt.Financial Sector. • .Survey suggestions • • • • • • • • • Reform regulatory regimes: Bring all financial regulations under SEBI Passage of the Banking regulations Bill 2005 Liberalise and develop spot and futures currency markets ( exchange traded) Introduction of repos and derivative in corporate debt Introduce standardised credit default swaps tradable on exchanges Auction rights to commercial borrowing within already defined limits.
What is a Budget? It is an estimate of future revenues and expenditure over a specific period. Budgets are usually prepared on annual basis for governments – both Centre and State and annual and monthly basis for business enterprises. It is convention to present it on the last day of February every year preceded by Economic Survey of the year. During the current year however it is presented this month because of the Government coming to power effectively after the elections in May 2009. .
interest payments that does not involve creation of any assets • Capital account: Receipts from liquidating (selling) assets or shares of a public sector company and spending to create assets and lending to receive interest. Capital budget or capital account includes non-revenue receipts and expenditure. All State expenditure is given from this fund – Contingency Fund: Any urgent and unforeseen expenditure is met from this Fund and is at the disposal of the President of India. • Revenue Account: All receipts like taxes and expenditure like salaries. • Consolidated Fund is split into revenue and capital budgets.• Annual Financial Statement: Government’s receipts and expenditure presented to the Parliament – Consolidated Fund. and Public Account – Consolidated Fund: Summation of all revenues. subsidies. Budget Nomenclature . money borrowed and receipts from loans it has given. Contingency Fund. – Public Account: It is a collection of deposits like the Public Provident Fund. • Revenue Budget consists of all revenue account.
and service tax • Corporate tax is the tax that all companies pay on their profit • Excise Tax: Tax levied on all manufactured goods • Minimum Alternate Tax: (MAT) If a company pays less than 10% of its profits as income tax. contains the entire element of tax borne by a good – including a Central and State level tax. like customs. Taxes . it has to pay a minimum of 10% on book profits. Fringe Benefit tax (FBT). Goods and Services Tax on the other hand. wealth tax. Securities Transaction Tax. excise. (2009-10 Budget changed this percentage)] • VAT and GST: Value added is a transparent form of tax on the sales based on the difference between the value of inputs used to produce particular goods and the output produced. • There are also non-tax revenues: Dividends of the PSUs.• Direct Taxes: Taxes that you and I pay to the Government directly: income tax. revenues from the public services etc. Gift tax.etc • Indirect Tax: It is essentially a tax on our expenditure.
This is met both from budget and nonbudgetary sources (State owned enterprises) Government’s support to the Central Plan is known as Budget support.Expenditure A Central Plan is the Government’s expenditure that includes a five-year road map. Plan expenditure: It is the amount the centre sets aside to States and UTs split into revenue and capital components in addition to the budget support. Non-Plan expenditure: All those bills the government has to pay under the ‘revenue expenditure’: interest payments. salaries. subsidies. Most of the capital expenditure goes for Defense. defense and pension. .
• Primary Deficit: Fiscal Deficit-Interest payments on earlier borrowings. Where it falls short. The global financial crisis and our economy’s melt down has forced to abandon this fiscal discipline in 2008-09. Now the Fiscal deficit is 4. it has to raise a debt from the public. FRBM Act 2003 specifies that revenue expenditure shall be met fully out of revenue receipts only. • Fiscal Deficit: Living beyond the means – Non-borrowed receipts-(revenue receipts+ loan repayments+ miscellaneous capital receipts. Any borrowing should be done only to meet capital expenditure.Deficits • Revenue Deficit: Ideally all revenue expenditure must be met from revenue receipts. . If this is growing it means that our fiscal strength is bad. The Act also mandates 3% fiscal deficit after 2008-09 in order to maintain fiscal stability. The excess of total expenditure over total non-borrowed receipts is called fiscal deficit.8% and is expected to rise to beyond 6%. primarily disinvestment proceeds) falling short of expenditure.
25cr (up from 2.39100cr (144%) Target of Farm Credit Rs. • Rural Employment gets a boost .Rural and Agriculture Sectors • • • • • Allocation under NREGP hiked to Rs.3.12000cr Direct transfer of fertiliser subsidy to farmers Accelerated irrigation benefit programme hiked from interim budget by Rs.1000cr.87cr) Allocation for PM Gram Sadak Yojana up by 59% to Rs.
Banking: Focus on Inclusive Growth • Rs.100cr to expand rural branches • No-frills accounts under Financial inclusion to expand • SHG-Bank linkage programme to cover 50% of women in next five years • Rs.4000cr to SIDBI from RIDF funds for giving boost to MSME sector. • First time repayment culture is recognised by the Government when it extended 1 percent subvention to farmers who promptly repay their loans to Banks. .
Infrastructure • 60% refinancing of PPP projects (financed by the commercial banks) by the IIFCL.887cr • 160%hike in allocation to Accelerated Power Development and Reform Programme • REC to accelerate the Rural Gramin Vidyudikaran Yojana . • 23% increase in National Highways Development Programme • Allocation under JNNURM up by 87% to Rs.12.
• National Action Plan on Climate Change would be launched.• National Female Literacy Mission to be launched • Student Loans to weaker sections: Over 5lakh students to benefit • Grants in aid to minority education institutions and national fellowships for students from the minority community • Allocation to Aligarh Muslim University to establish its branches in WB and Kerala • Modernization of Employment Exchanges in PPP mode to ensure job seeker registration on-line • National Rural Health Mission Interim Budget outlay of Rs. Education and Health Sectors .12070cr hiked by Rs 2057cr. • National Ganga River Basin Authority and National River and Lake authority allocated Rs.335cr.
50 Changed( 2001011)lakhs 2.50 1.40 1.Personal IncomeTax(Individual .60 Sr.25 1.80 1.Citizen Women Others .Lacs) No Surcharge on Personal Income Tax (to be removed in phased manner) (persons covered: Firm and Local Authority also) (AY 2010-2011) Direct Tax Proposals Assessees Earlier( 2)00910)lakh s 2. HUF Artificial Juridical Person) – Basic Tax Exemption Limit (in INR.
Other Taxes • MAT increased to 15% from 10%. carry forward expenditure to 10years • Fringe Benefit Tax abolished • Commodity Transaction Tax abolished • Taxation on LLPs to be same as for Partnership companies • Extension of benefits of sunset clause under Sec 10A and 10B for EOUs and those in Free Trade Zone • Deduction in respect of contribution to political parties • Tax benefits of New Pension policy available to private/public employees only • Service tax coverage extended to Continental shelf of India and Export Economic Zones .
1.05.8% of GDP compared to 2.41.600cr.2.25lakh crores) • Unique Identity Number to be issued to all citizens to improve access to citizenship services universally in the next two years. Allotted Rs. • Defence outlay hiked to Rs. (R. • Interest payments would be 36% of non-plan expenditure.703cr from Rs. .5% last fiscal • Total expenditure goes up by 36% • Food Security Act to be introduced: People below poverty line to be provided rice and wheat up to 25kg per month.1.500cr.Estimates • Fiscal Deficit to be 6.
. would increase the farmer’s wage bill No measures to contain the ever-rising food bill of the common man.Comments • • • • • • • • Budget is one of missed opportunities Fillip to investments lacking Direct input subsidy other than fertilisers not mentioned No strategy to achieve the budgeted agriculture growth of 4% p.75 percent growth of economy cannot be ensured Steps for improving manufacturing sector growth are also found wanting The Rs. No mention of Bankruptcy Law and other important Laws affecting the financial and corporate sector to give boost to reforms.100 per day minimum wage under NREGS although welcome from the overall wage security angle.25-7.a without which the 7.
4. 2.08 % of GDP • Revenue Deficit :.6.01 Trillion • Fiscal Deficit :.Rs.Rs.83 Trillion • Revenue Deficit :.Budget Deficits • Fiscal Deficit :.83 % of GDP .4.
charges for services provided by govt etc. 609551 crores compared to Rs. There has been growth in non-tax revenue in 2008-09. Huge borrowing continues.For 2009-10 Revenue receipts expected to be in line with budgeted estimates for current year Rs. dividends and profits of PSUs. this includes interest on loans. royalty on offshore crude oil and gas production. this is assumed to continue in the year ahead. but higher than the revised estimates. 602935 crores. Tax revenue projected lower than current year’s budgeted estimates. .
rural development.Receipts and expenditures estimated to be 6% higher than the revised estimates for 2008-09. Fiscal deficit therefore estimated at 5. BUT No major change in social sector spending from last year – despite budget speech claims . infrastructure.5% of GDP and revenue deficit at 4% of GDP Stress in budget speech on social sector. highways etc.
What about the Fiscal Deficit worry? It remains – such high fiscal deficit numbers will impact economic growth down the road. . Govt. should concentrate on more effective utilization of funds. Flip side is the expenditure on infrastructure and rural development can work to providing incomes and employment potential for growth.
plunges 3% as ‘budget disappoints’ But. . ‘There is no mandate to tweak taxes.Why has the stock market reacted unfavourably? Stock market reaction unreal…. there was no need to raise expectations for anything very different – as Pranab Mukherjee says.. I can’t indulge in reckless borrowing’.
082 599. 19.935 507.301 900.551 497.173 465.150 2008-2009 Revised Estimates 562. 2. 9. Fiscal Deficit % of GDP .780 9.120 7. 6.694 56. 14.955 343.680 9.765 55.349 36. 8.767 33. Non-tax Revenue Capital Receipts (5+6+7)$ Recoveries of Other Receipts Loans 95. 13.498 448.5 % of GDP 20.736 11.446 97.287 2.352 326.725 1.231 668.146 238.206 282. 4.146 243.0 133.511 68.5 192.790 332.698 2. 133.884 507. Borrowings and other Liabilities $ Total Receipts (1+4)$ Non-plan Expenditure On Revenue Account of which. 18.119 92.949 4.835 953.835 5.184 1.512 900.953 803.165 96.800 953.953 617.085 105. 12.619 750.231 848.149 248.785 147.596 3.4 326. Interest Payments On Capital Account Plan Expenditure On Revenue Account On Capital Account Total Expenditure Revenue Expenditure Capital Expenditure Revenue Deficit (17-1) 190.273 4.287 750. 16. 10. 5.996 561.0 225.656 41.807 59. 15.515 6.534 4.346 285. Revenue Receipts Tax Revenue(net to Centre) 2008-2009 Budget Estimates 602.203 338.884 658.957 241.(In Crore of Rupees) 1. 17.507 241.497 10.0 332.970 2009-2010 Budget Estimates 609.386 209.567 111.
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. Full scale budget in a few months – that’s where the action should be. major changes can be made in June. it is a sensible budget. with revised numbers depending on the scenario as it unfolds.Is this a ‘Good’ Budget? Given the circumstances. if at all .
10lakh crores and above Budget. the largest since independence. .This is a Rs.
THANK YOU .
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