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CHAPTER 15
CONCEPT
• A central budget is an annual financial statement presentation of item wise estimates of expected revenue and
receipts on one hand and anticipated expenditure on the other.
• Time frame of the budget – one financial year spanning from 1st April of the current year to 31 st march of the next
year.
• According to Article 112 of the Indian Constitution, the Union Budget of a year, also referred to as the Annual
Financial Statement (AFS), is a statement of the estimated receipts and expenditure of the government for that
particular year.
• Presented on 1st February each year for the coming year. Earlier, on the last working day of February of each year.
OBJECTIVES
• Reallocation of Resources
• Economic Stability
• Economic Growth
1)Public Loans/Debts
2)Realisation of Loans
3)disinvestment
TYPES OF BUDGET
Deficit Budget
GOVT RECEIPTS < GOVT EXP
BUDGETARY DEFICITS
• Revenue Deficit- It is the difference between total revenue expenditure &
total revenue receipts.
• Fiscal Deficit- Signifies requirement of govt. borrowings. It is the
difference between total exp & total revenue receipts except govt
borrowings.
• Primary Deficit- Signifies loan requirements of govt to finance exp other
than interest payment.
• Effective Revenue Deficit- It is aimed to deduct the money used out of
borrowing to finance capital expenditure. It is the difference between
revenue deficit and grants for creation of capital assets.
BUDGETARY DEFICITS
1. Revenue Deficit: Total
Revenue Expenditures – Total Revenue Receipts
2. Fiscal Deficit:
Total Revenue Expenditure – Total Receipts(except Govt borrowings)
3. Primary Deficit:
Fiscal Deficit – Payment of Interest
4. Effective Revenue Deficit:
Revenue deficit – Grants for creation of capital assets.
PLAN & NON PLAN EXPENDITURE
Non-plan expenditure is what the government spends on the so-
called non-productive areas, such as salaries, subsidies, loans and
interest, while plan expenditure pertains to the money to be set
aside for productive purposes, like various projects of ministries.