New Delhi: With the first session of the Union Budget 2022 commencing today, it is crucial to understand the intricacies of this comprehensive statement presented every financial year. The Union Budget is presented to the Parliament in the form of an Annual Financial Statement and is mandated by the Constitution.
What is the Annual Financial Statement?
Though 'Union Budget' is a rather important word in the economic dictionary, nowhere in the Constitution the term Union budget or budget or general budget is used. The fact that preparation of the Union Budget is governed by the Constitutional provisions makes its absence in the Constitution even more surprising. The constitutional term for the Union Budget is, in fact, Annual Financial Statement.
What is a Finance Bill?
When the Annual Union Budget is presented before the Parliament, a Finance Bill is also presented to fulfil the requirement of Article 110 (1)(a) of the Constitution. The Finance Bill basically serves the purposes of imposition, abolition, remission, alteration or regulation of taxes proposed in the Budget. It also contains other provisions relating to the Budget that could be classified as Money Bill.
What is FRBM Act 2003?
The Union Budget has to necessarily comply with the Fiscal Responsibility and Budget Management (FRBM) Act of 2003, making its clauses a pivotal factor in every budget session. The main objective of the FRBM Act 2003 is to curtail excessive spending by the government by putting a legal cap on both fiscal deficit and revenue deficit so that governments avoid fiscal profligacy.
What is the Expenditure Budget?
Among the several crucial limbs of the Union Budget is the Expenditure Budget, which features expenditure of the tax and non-tax revenue collections, interest-earning, dividends etc. in the Union Budget. Basically, in the Expenditure Budget, the estimates made for a scheme or a programme are brought together and shown on a net basis on revenue and capital basis at one place.
What is Expenditure Profile in the Union Budget?
The voluminous information contained in the Union Budget is organized under different heads primarily for two reasons – first, to comply with the Constitutional requirement and second, for easy reference of the members of Parliament and the general public. In recent years, the Finance Ministry has also decided to provide certain expenditure-related details under the title of the 'Expenditure Profile', which basically gives an aggregation of different kinds of expenditures and also include certain other items across demands.
What is a Receipt Budget?
The Receipt Budget is an important document of the financial budget wherein the estimates of the receipts included in the Annual Financial Statement are further analyzed. The document provides details of tax and non-tax revenue receipts besides capital receipts and explains the estimates of projected collection.
What is Revenue Deficit in the Union Budget?
Under the Fiscal Responsibility and Budget Management Act of 2003, the Union government is required to report various shortfalls or deficits to the Parliament. These may include the Fiscal Deficit, Revenue Deficit and Primary Deficit. Among these, the Revenue Deficit is basically the difference between the government’s revenue expenditure and its revenue receipts.
What is the Consolidated Fund of India?
Consolidated Fund of India owes its existence to Article 266 of the Indian Constitution which deals with the Consolidated Funds both at the Central and State level. All revenues received by the government, loans raised by the government, and also the receipts from the recoveries of the loans granted by it, collectively form the Consolidated Fund of India.
What is the fiscal deficit in the Union Budget?
After the tax proposals, one of the most keenly watched numbers in the Union Budget in the tax proposals submitted by the Finance Minister is the fiscal deficit. For macroeconomists, who study government finances including the revenue receipts and public expenditure, the fiscal deficit is the most important number, having more importance than even tax proposals. This is chiefly because the fiscal deficit is directly linked to the government’s financial health.
What are Demands for Grants in Budget?
Each Demand for Grant in the annual Union Budget separately gives the totals of voted and charged expenditure. It also classifies the expenditure as revenue and capital expenditure, and later gives the grand total on the basis of the amount of expenditure for which the demand is presented.
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