Economics Uncategorized

Budgetary Procedure

Budgetary procedure refers to the system through which the budget is prepared, enacted and executed.
(A) Preparation of the Budget:
The Ministry of Finance prepares the
Central Budget every year. At the state level
the finance department is responsible for the Annual State Budget. While preparing the budget, the following factors are taken into account:
 The macro economic targets to be achieved within a plan period;
 The basic strategy of the budget;
 The financial requirements of different
 Estimates of the revenue expenditures
(includes defence expenditure,
subsidy, interest payment on debt
 Estimates of the capital expenditures
(includes development of railways,
roadways, irrigations etc.);
 Estimates of revenue receipts from tax
and non-tax revenues.  Estimates of capital receipts from the
recovery of loans, disinvestment of public sector units, market borrowings etc.
 Estimates of the gap between revenue
receipts and revenue expenditure; and
 Estimates of fiscal deficit, primary
deficit, and revenue deficit.

(B) Presentation of the Budget:
The hon’ble Minister of Finance, on
behalf of the Central Government, places the Union Budget before Parliament on the eve of a new financial year. Similarly at state levels, the Hon’ble Finance Minister of the respective State Government places the State Budget before the State Legislature.According to the Indian Constitution,all money bills must be initiated in theLower House. All the money bills are first placed before the LokSabha at the Centre, and before the VidhanSabha at the State level. The demands of various tax proposals are included in the budget. After the finance bill is passed, an appropriation bill is presented to give legal effect to the voted demands, and to authorise the expenditure as per the budget. In this way,
the budgets are enacted in India.

(c) Execution of the Budget:
The budget is mainly executed by
different departments of the Government.
Proper execution of the budgetary provisions are important for the efficient utilisation of the allocated funds. Parliamentary Control over the Budget In India,the Government Accounts are maintained in three parts:
(i) Consolidated Fund
(ii) Contingency Fund
(iii)Public Accounts

There are also two committees of
parliament, viz, (i) The Public Accounts Committee,and
(ii)The Estimates Committee.These committees keep a constant vigil on the expenditure so that no Ministry or Department exceeds the amount sanctioned to it.

Budgetary Deficits:
Budget deficit is a situation where budget receipts are less than budget expenditures. This situation is also known as government deficit.

In reference to the Indian
Government budget, budget deficit is of
four major types.
(a) Revenue Deficit
(b) Budget Deficit
(c) Fiscal Deficit, and
(d) Primary Deficit

(A) Revenue Deficit;
It refers to the excess of the government revenue expenditure over revenue receipts. It does not consider capital receipts and capital expenditure. Revenue deficit implies that the
government is living beyond its means to
conduct day-to-day operations.
When RE – RR > 0
(B) Budget Deficit;
Budget deficit is the difference
between total receipts and total
expenditure (both revenue and capital)
(C) Fiscal Deficit; Fiscal deficit = Budget deficit + Government markets borrowing and liabilities
D ) Primary Deficit; Primary deficit is equal to fiscal
deficit minus interest payments. It shows

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