Budget Guide

Express News Service
Hyderabad, November 4:
    The newly formed 29th state Telangana is introducing its first full budget on Wednesday. Finance Minister Etela Rajender has the privilege to present the first budget under the leadership of Chief Minister K Chandrasekhar Rao. People have several hopes on the first budget. The details of the budget will be known only on Wednesday.
 Here is the guide for the budget for the reader to understand in a better way their first budget.


BUDGET:
In the Constitution Budget is mentioned as "Annual Financial Statement". The term "Budget" is originally derived from the French word "Bougette" which means a leather bag. The Chancellor of the
Exchequer in Britain originally carried the financial proposals for the year to the House of Commons in a leather bag. Through usage,
gradually, the word "Budget" has come to be used to signify the
documents in the bag instead of the leather bag.


APPROVAL: All the expenditure incurred by the State should be
authorised by the Legislature. As it is not possible for the legislature to be in session throughout the year to scrutinise and approve the day to day monetary transactions of government, a system has been evolved by which the government prepares Budget for the ensuing year, showing all the anticipated receipts and expenditure
classified under certain broad heads of accounts.


All items of expenditure are broadly either "Charged" or "Voted".
"Charged", "Voted" Expenditure:
CHARGED: The emoluments and allowances of the Governor and other
expenditure relating to his office. The salaries and allowances of the Speaker and the Deputy Speaker of the Legislative Assembly and in the case of a State having Legislative Council, also of the Chairman and the Deputy Chairman of the Legislative Council.
  Debt charges for which the State is liable including interest,
sinking fund charges and redemption charges, and other expenditure relating to the raising of loans and the service and redemption of debt. Expenditure in respect of the salaries and allowances of Judges of any High Court. Any sums required to satisfy any judgment, decree or award of any court or arbitral tribunal.
     Any other expenditure declared by this Constitution, or by the
Legislature of the State by law, to be so charged.

VOTED: The other expenditure is treated as voted expenditure.


BUDGET DIVISIONS: The "Annual Financial Statement" or "Budget" consists of the following divisions. Consolidated Fund of the State, Contingency Fund of the State and Public Account of the State.

Consolidated Fund of the State: All revenues received by the State government, loans and borrowings comes under this.


The transactions relating to the receipts and expenditure out of
the Consolidated Fund are accounted for in three different Sections. Revenue Account, Capital Account and Loan Account Revenue Account/ Revenue Receipts.


Revenue Receipts Comprise:

Tax Revenue: Collections under land revenue, stamps and
registration fees, sales tax, State Excise, taxes on vehicles,
entertainment tax and also share in Central taxes.

Non-tax Revenue: Interest receipts, dividends on capital
investments, receipts of various departments like fees for
examinations, tuition fees, receipts on forest produces, receipts
from mines and minerals and also 'User Charges' collected by the
departments for providing services.

Grants-in-aid and Contributions: Grants-in-aid from the Central government for various plan and non-plan schemes, statutory grant,
state share of union excise duties.


Revenue Expenditure: The expenditure under Revenue Account incurred for administering the different departments of the government, for
payment of interest charges on the borrowings of the government, for relief measures on natural calamities and on the maintenance and repairs of various capital assets like buildings, roads and irrigation sources. Expenditure which does not result in
creation of assets is treated as revenue expenditure.


Revenue Surplus or Deficit: When the expenditure on revenue account is less than the revenue receipts, the difference is called the "Revenue Surplus" for the year and when it is more, the difference is called the "Revenue Deficit".


  Capital Account: The Capital Account is the account of the expenditure of the capital nature i.e on acquisition of concrete assets of a lasting nature like purchase of land, construction of building, etc., which yield revenue or which avoid a recurring expenditure to government. All irrigation and electricity projects which are lasting assets and which yield revenues to government fall under Capital Assets and expenditure on construction of such projects is accounted for under Capital Account. The Buildings which save the government from recurring expenditure on rents are also considered as Capital Assets and the expenditure on construction of these buildings is classified under Capital Account.

Loan Account: The Loan Account is the account of Public Debt incurred and discharged and of loans and advances by the State government to local bodies, public sector undertakings, government servants and others and recoveries from them.


   
Demands for Grants. The estimates of expenditure from the Consolidated Fund included in the Budget Estimates and required to be voted by the
Legislature are presented to the Legislative Assembly in the form of demands for grants.

  These detailed demands for grants show Head of the Department-wise details of the provisions included in the demands for grants for
expenditure for the previous year and the budget year and revised
estimates of the current year. They also give a break-up of the
estimates, i.e., details of the minor heads (Programmes) sub-heads
(Organization or Scheme), detailed heads (Object of expenditure) e.g. salaries, wages, travel expenses, machinery and equipment, grants-inaid,etc., sub-details under detailed heads like Pay, Allowances, Dearness Allowance etc.

    
Supplementary Demand: It often happens that in the course of a financial year, expenditure has to be incurred on items and schemes for which approval of the Legislature has not been taken in the Annual Financial Statement (Budget) or expenditure has to be incurred on the items and services in excess of the amount voted by the Legislature in the Budget. It may not be practicable to obtain the approval of the Legislature as and when an expenditure has to be incurred urgently on new items or schemes during the course of the financial year. Hence, in such cases the expenditure is incurred by Government by sanctioning advances from the Contingency Fund pending approval of the Legislature. When the Legislature meets, a supplementary statement showing the estimated expenditure on all such items is laid before the Legislature and its approval taken.

Public Accounts Committee: At the close of the financial year, the Accountant General submits the Audit Report 'Finance Accounts' and the ' Appropriation Accounts' to the Public Accounts Committee (PAC). PAC, which is formed from out of the members of Legislature, will examine the reports to know whether there are any  financial losses sustained by government through fraud, negligence, inefficiency etc., of government servants, failure to collect the estimated taxes, wasteful expenditure, etc.


Contents of Budget Document: The Budget documents generally contain four sets of figures: The Accounts of the previous year, Budget Estimates of the current year as originally presented to the Legislature, Revised Estimate for the current year and Budget Estimate for the ensuing year.



Revenue receipts: Revenue receipts of government will be under three distinct groups. Tax Revenue, Non-tax Revenue and Grants-in-aid and Contributions.


For the purpose of expenditure the transactions of Government have been brought under different functions representing major divisions of the efforts such as Education, Agriculture etc.
These different functions of government have been grouped into 3
distinct sections: They are
(1) General Services: Covering Police, General Administration, etc.,
which are indispensable to the existence of an organised State;
(2) Social Services: Covering activities associated with provision of
services needed for community living such as education, medical and
health, social security services, etc.
(3) Economic services: dealing with activities or assistance
provided to agencies in the fields of production and trade, such as
agriculture, industry, power, irrigation etc.


Budget Speech: The Budget Speech contains a review of the financial position of the State for the previous year, current year and the coming year. The main purpose of the Budget speech is to explain the policies and programmes of the government and how far they had been implemented during the previous year and how they are going to be introduced and implemented in future.

 
ends