Budget Terminologies

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Union BudgetUnion Budget -- TerminologiesTerminologies

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Overview

Introduction

Budgetary Estimates

Revised Estimates

Budget Deficit

Revenue Deficit

Fiscal Deficit

Current Account Deficit

Fiscal Consolidation

GDP growth vis-à-vis Credit Growth

Questions



What is Budget?

Is a list of all planned expenses and revenues.

Is a plan of savings & spending.

It is derived from French µbougote¶ meaning purse.

First General Budget was announced on November 26, 1947.

Budget comprises data for three years

Actual figures for the preceding year.

Budget Estimates for the current year.

Revised Estimates for the current year.

Budget estimates for the following year



Budgetary Estimates

Used for cost estimates at an early stage.

When there is some limited information and or some info

is not available.

It is like an initial estimation to begin with.



Revised Estimates

It is a change in the estimate of the budget, when the budget period

is in force.

Subject to both exogenous and endogenous factors.

Includes information not available at the time of Budgetary Estimate.

Subject to scrutiny and potential alteration.



Budget Deficit

Difference between public spending (expenditure) and

revenues(receipts).

For a particular year, it is the total of fiscal deficit for the

year plus the past debt accumulated.Debt is an accumulation of yearly deficits.

It is the net sum of all past deficit/surplus if any over the

years



Tax Revenues

Non Tax revenues

Recovery of loans

Pub Sec Disinvestments

Rev Receipts

Capital

Receipts

Total GovtReceipts

Budget Deficit

Government Receipts



Revenue Deficit

What is revenue?

Tax Revenue

Non Tax Revenue

What is Revenue Deficit?What is Revenue Surplus?

What is Revenue Expenditure?

Effective Revenue Deficit .



Revenue Deficit

Item Rs. In Crores

Revenue Receipts in 2011-12 789892

Revenue Expenditure 1097162

Revenue Deficit 307270

Revenue Expenditure on A/c of Grant

for Creation of Capital Assets

146853

Effective Revenue Deficit 160417



Fiscal Deficit

It is an economic phenomenon, where the Governments

total expenditure surpasses the revenue generated.

It is the difference between the Government¶s total

receipts excluding the borrowings and total expenditure,i.e. Total Gov. Exp ± Revenue Receipts + Non Debt

Capital Receipts.

Revenue Receipts includes

Tax Revenue receipts

Non Tax Revenue receipts

Non Debt Capital Receipt includes

Disinvestment

Dividends from PSEs.



Fiscal Deficit

Fiscal Year 2010-11 BudgetEstimates

2010-11 RevisedEstimates

2011 -12 BudgetEstimates

Rs. In Crores 381408 400998 412817

Percentage of

GDP

5.5 5.1 4.6




Current Account is of two parts ± Trade Account &

Invisible Account.

Trade Account ± Balance from Import and Exports of

Merchandise only.Invisible Account ± Consists of 3 components ±

Services, Investment Income, Transfer Payments.




It is the difference between the components of the

Current Account in exports and imports, where imports

are more than exports.

The Country becomes a debtor to other countries.More money is paid out, than what is being brought into

the country.




Major Items of India's Balance of Payments as of Sept 2010 In US $ Billion

Item April ± June July ± September

2009-10 2010-11 2009-10 2010-11

1. Exports 39.20 56.30 43.4 54.30

2. Imports 65.40 87.80 73.00 89.60

3. Trade

Balance (1-

2)

-26.30 -31.60 -29.60 -35.40

4. Invisibles 22.10 19.40 20.40 19.60

5. Current A/cBalance

(3+4)

-4.20 -12.10 -9.20 -15.80

6. Capital A/c

Balance

4.30 15.90 18.60 19.00

PR = Partially Revised, P = Preliminary



Fiscal Consolidation

A conscious policy of the Government to live within its

means.

It is a long term process, a road map and is not a single

budget announcement.Efforts to raise revenues.

Bring down wasteful expenditure.

Fiscal Responsibility and Budget Management Act 2003

(FRBM Act)Target for states to eliminate revenue deficits and fiscal

deficit 3% of State GDP for 2014-15, as per 13th Finance

Commission.

Public Debt Management Agency Bill to be introduced.

Budget Terminologies

Documents

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