Personal Finance

Simplifying jargon

BL Research Bureau | Updated on July 07, 2019 Published on July 07, 2019

Simplifying a few terms to understand the Budget better

The Budget for FY19-20 has been recently announced and all the budget documents are avilable on the website indiabudget.gov.in. To understand the Budget speech and to analyse the implications of it on the economy, it is important to know the various components with which the Budget is prepared. Here, we have simplified a few key terms used in the Budget.

Economic Survey

The Economic Survey reviews the development in the economy over the previous 12 months and summarises the performance of major development programmes and the prospects of the economy in the short to medium term. It analyses the trends in significant sectors having bearing on the Budget, such as agricultural and industrial production, infrastructure, employment, money supply, prices, trade and foreign exchange reserves. It is usually presented to Parliament ahead of the Budget.

Budget at a glance

It is a presentation of the Budget that broadly covers important topics — showing budgeted and actual figures for the key revenue and expenditure items. It contains vital information about revenue deficit, fiscal deficit and primary deficit (excludes interest payments from fiscal deficit) of the Centre. It also presents the key expenditure and tax proposals made in the Budget along with details of disbursements under various schemes and resource transfer to States. If you want a layman’s perspective of the Budget, look at this section for a good grasp of the Budget financials.

Finance Bill

The Finance Bill contains details on tax proposals and modifications. It is presented to Parliament immediately after the Budget. Unless you are looking for specific amendments to a certain Financial Act, for example, the Income Tax Act or the RBI Act, skip this section to directly look at the memorandum explaining the provisions of the Finance Bill.

Memorandum

The Memorandum elucidates the provisions introduced in the Finance Bill — usually with examples. Rush to this section in case of any ambiguity regarding the provisions and its nitty-gritty.

Annual Financial Statement

The Annual Financial Statement (AFS) contains three statements — the Consolidated Funds of India (CFI), the Contingency Fund and the Public Accounts.

If your focus is on analysing the revenues and expenditures of the government, analysing the CFI Statement should suffice.

Contingency Fund reports urgent unforeseen expenses, while Public Account gives details on collections (say, provident funds, small saving collections) where the government acts as a mere custodian.

AFS facilitates comparison of the budgeted estimates of the following year with the revised estimates and the budgeted estimates of the previous year and the actuals of the year preceding the previous year.

Receipts Budget

The estimates of receipts included in AFS are further analysed in the Receipts Budget. It gives details of tax and non-tax revenue and capital receipts in addition to explaining its estimates.

If you are looking for details of a receipt item, this is the place to look at. ‘Annexure’ gives historical data of receipts and expenditure under various heads, which is useful – especially if you want to do away with data sourcing from Budget documents of each financial year.

Expenditure Budget

The Expenditure Budget is divided into three categories — Expenditure profile, Demands for Grants, and Expenditure Budget.

Expenditure profile summarises the net expenditure of various ministries and departments. It includes the statement of major variations of expenditure between the budgeted and the revised estimates of the current financial year and the statement of major variations between revised estimates of the current year and the budgeted estimates of the following year.

Demands for Grants is the estimates of expenditure of major heads of various departments to be spent from the CFI and which are required to be voted by the Lok Sabha.

Expenditure Budget further analyses the estimated expenditure of various ministries or departments and provides the bifurcation of expenditure into capital and revenue.

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