budget matters.pdf

7/30/2019 budget matters.pdf

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Budget MattersSmt. S. Rupa


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The Business Rules

The Finance Department has developed fourgeneric Codes and Manuals

1. A.P. Treasury Code

2. A.P. Financial Code

3. A.P. Accounts Code

4. A.P. Budget Manual


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Budget Manual

AP Budget Manual outlines the process forformulation of the budget, changes to thebudget execution during the year, inparticular, it outlines the accountabilitiesof line Departments in the budget process.


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Part - I

a) The Structure of Budget Accounts

b) The Budget and AccountingClassification


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Part - II

Instructions for the Estimating Officersin Preparation of Budget Estimates


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What is Budget?

Under Article 202 of the Indian ConstitutionBudget is Annual Financial Statement ofthe State for each financialYearto be laid

before the Legislature.

A Statement of estimated receipts and

expenditure of the state for each financialyear is called Annual Financial Statement.Budget means estimated receipts and

expenditure.


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Why Budget?

Integral part of the society Provides road map for financial success

and independence

Increases socio, economic and politicalactivities:

Helps for setting of financial and physical

goals Prepares for emergency


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What does Budget contain?1. Consolidated Fund

Article 266 (1) of the constitution enumeratesthe following as constituting the fund

(i) all revenues received by the Government

(ii) all loans raised by the Govt., by issue oftreasury bills, loans or ways and means of

advances

(iii) all moneys received by Govt., inrepayment of loans


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Budget Classification

Revenue Account:

The account of current income and Expenditure of theState. The income is derived mainly from taxes and duties,

fees for services rendered fines and penalties, revenue

from Govt., estates such as forests etc.,


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Revenue AccountReceipts

Tax Revenue

Direct Taxes

(Income & ex., LandRevenue Stamps & RegOthers)

Indirect Tax (Sales Tax,Excise Duty, MotorVehicles tax etc.,)

Non Tax Revenue

Interest, dividends, Social Grants in aid

ExpenditureGeneral ServicesOrgans of State- Legislature,Governor, Council of Ministers,Administration of justice andelection. Fiscal Services -

Interest Payments,Administration Services (Publicservice administration, police,jails, fire finance etc.,

Social ServicesEducation, Health, Medical &Health Social welfare etc.,Economic ServicesAgriculture, Industry, IrrigationRD etc.,

C it l A t


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Capital Account(The account of expenditure of a capital naturesuch as the construction of buildings, irrigation

and electricity works)Receipts

Open MarketLoans

External Loans

Loans from RBI

ExpenditureGeneral ServicesOrgans of state, Fiscal Services,Pensions, Interest payments,administrative services

Social ServicesEducation, Health, Medical & Health,Social Welfare etc.,Economic ServicesAgriculture, Irrigation, Transport, Poweretc.,


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Loan Account(The account of public debt incurred and dischargedand of loans advances made by the State Govt., to

local bodies and recovered from them.

Loan Receipts

Loans and Advances

Open Market

operations

GoI borrowings

Loan Repayments


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Public Account: Article 266 (2)

Deposits received from the contractors,

merchants and Judicial deposits

Funds deposited by local bodies such aPR Institutions, Corporations, Companies

and Boards

Small savings, PF of Govt., servants

Deposits and advances

Suspense and Miscellaneous funds


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Contingency Fund : Article 267 (2)

Apart from contingency Fund there isanother fund called Contingency Fund

which shall be at the disposal of the

Governor of the State, created withRs200.00 Crs. It is for emergency

unforeseen and unavoidable expenditure.


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Structure of AccountsSect oral Classification

Revenue receipts : 0020 to 1999

Revenue expenditure : 2011 to 3999

Capital expenditure :4011 to 5999

Loans & Advances, : 6011 to 7999

Contingency Fund : 8000

Public Account : 8001 to 8999


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7TIER CLASSIFICATION

MAJOR HEAD(functions of the Govt.,) --- 4 DIGITS CODESUB MAJOR HEAD --- 2 DIGITS CODEMINOR HEAD

(under each function plan or non plan) --- 3 DIGITS CODEGROUP SUB HEAD --- 2 DIGITS CODE

SUB HEAD

(Organization / Programme) --- 2 DIGITS CODEDETAILED SUB HEAD --- 3 DIGITS CODE(Nature of expenditure)

SUB DETAILED HEAD --- 3 DIGITS CODE


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Sl.no Function ReceiptsHeads

RevenueAccount

Expenditure

HeadsRevenueAccount

Expenditure

Heads

CapitalAccount

Loans &AdvancesAccount

1.

Medical andpublichealth

0210 2210 4210 6210

2. Housing 0213 2213 4213 6213

3. RoadsTransport

1055 3055 5055


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Budget Preparation

Prescribed Formats sent to Disbursing Officers in July/ August

Grant

MajorHead/MinorHead

Sub Head/Detailed Head

Accounts forpreviousYear

BE for thecurrent Year

RE forCurrentYear

BE for theNext Year


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Preparation of Number Statements, BudgetEstimates and Revised Estimates

[Number Statements]A statement detailing particulars of posts in eachpermanent and Temporary both Gazetted andnon-gazetted) monthly pay special pay under

011- pay and 012 allowances

Para 16.20.1 of the AP Budget Manual, the Head

of the Department and other Estimating Officersare required to submit Number statements to theFinance Department by 1st August every year.


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Statement of posts in each permanentand Temporary, both Gazetted and non

gazettedHRA,CCA, Encashment of EL, Medical Re-imbursement, LTC, Educational

concessions, The details of vacant postsand the period likely to be vacant shouldbe indicated. The number statementsinrespect of posts under plan , non-planand grant-in-aid towards salaries shouldbe sent separately in the proforma I, II, &III in Annexure-I prescribed by Fin. Deptt.


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Preparation of Budget Estimates

Estimated receipts and expenditure under each

head of account during a financial year to bepresented to the Legislature.

It is based on the Departmental Estimates

submitted by the HODs and other EstimatingOfficers. They should prepare their estimates induplicate in the proforma in duplicate and sendone copy to finance department and another tothe administrative Department of the Secretariat

concerned by 1st

October. The AdministrativeDepartment will send with their comments withexplanatory note to Finance by 15th Octoberevery year.


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Preparation of Revised Estimates

An estimate of probable receipts andexpenditure under each head of accountduring the course of the year withreference to the actual transaction

recorded for the months of the year andanticipated expenditure for the remainingmonths. It must be very careful inpreparing the Revised Estimates as we

arrive the closing balance. It is the bestguide for the preparation of the next yearBudget.


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Grant No.

MJH/SMJH

MH

Accounts

2009-10

BudgetEstimate

2010-11

RevisedEstimate

2010-11

BudgetEstimate

2011-12

Opening balance

II. Revenue Receipts

1.Central Taxes

2.Tax Revenue

3.Non-Tax Rev.

4.Grants-in-aid

III. CapitalReceipts

5.Open Market

Loans6.Floating Debt

7.Loans from GOI

8.Other Loans

9.Deposits

Particulars Accounts Budget Revised Budget


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Particulars Accounts

2009-10

BudgetEstimate

2010-11

RevisedEstimate

2010-11

BudgetEstimate

2011-12

Non Plan ExpenditureOn Revenue Account

Of which Interest payments

Capital Disbursements

Loans

Plan Expenditure

Total Expenditure

Revenue Expr

Capital Expr.

Loans &Advances

Capital Disbursements

Overall Transaction

Closing Balance

Revenue Surplus

Fiscal Deficit


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The following documents are at presented to the legislature bythe finance ministers on the day appointed by the Governor

a) Annual Financial Statementb) Detail Budget Estimates of revenue

(Plan & Non- Plan)

c) Demands for grants

d) Detail estimates of debt account

(Receipts and Disbursements)

e) Appendix I (Details of Staff)

f) Appendix II (Details of Works)g) Provisions for assistants for local bodies

h) Budget for expenditure on STs

i) Budget for expenditure on SCs


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Finance Department consolidates the Revenueand the expenditure by December end andsubmits to M. Finance for examination.

In Jan, F.M. Prepares financial policy inconsultation with the Chief minister

Final submission to Cabinet for consideration

After the Cabinet approval, budget is ready forpresentation in February to the legislature.


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Finance Minister presents budget to theLegislature in the last week of February

General Discussion on Budget

Discussion on Demand for GrantsAppropriation Bill

Finance Bill

Vote on Account


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Vote on Account:

It Is a grant made in advance before commencement of the comingfinancial year in the respect of the new year pending voting on demandfor appropriation bill in the legislature.

After the Budget is presented to the legislative Assembly towards theend of Feb., the general discussion thereon, voting of the Demands forGrants and the legislation of the Appropriation act are normally expectedto be completed by the end of March, but in certain circumstances, alonger time may be allowed for general discussion, voting of demandsand the passing of the appropriation Bill, with which the work speciallythe work may not be completed and it is necessary to continue the workinto a part of the budget year also. On such occasions, demands foradvance grants in respect of the estimated expr., for a part of thebudget year may be presented to the LA. Thereafter the demands will bediscussed and voted on and finally passed as an appropriation Act in the

manner laid down in the constitution.


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Appropriation bill :

After voting for all the demands for grants the bill isintroduced and has to go before the both the houses inthe legislature (demand for grants) for sanction

Voted Expenditure:

The expenditure which requires vote of the LegislativeAssembly.

Charged Expenditure:

The Expenditure which is not subject to vote of theLegislative Assembly.

R l f L i l ti C il


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Role of Legislative Council

No power of amending and rejecting the

budget It can make recommendations to theAssembly within 14 days

Assembly may consider itsrecommendations or reject and include inthe budget.

After passing both the houses ,Appropriation bill or Finance bill submittedto the Governor for his consent.


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Governor may return it for reconsideration withina period of 10 days.

After Governor assent the bill becomes an act.

Appropriation act :

The appropriation bill is passed by both thehouses, it waits the Governors assent, then it willbecome an Act. The amount in the act became

sanctioned grant for expenditure.The administrative Departments, HODs and Sub-Ordinate Offices can incur the expenditure.


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Control of Expenditure

CCO-Chief Controlling Officer

SCO Subordinate Controlling Officer

DDO Drawing and Disbursing Officer


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Sub-ControllingOfficer

Chief Controlling Officer

DTO

STO

DTA

FINANCE

Secretary

LEGISLATIVEASSEMBLY

DDOs


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Budget Control

The CCO Should prepare and send the distribution

statement of funds made to their SubordinateOfficers quarterly wise, to the DTA. The DTA willscrutinize and authorize the distribution statementsto DTOs to admit the bills on quarterly basis. The

CCO may sent the distribution statement directly tothe SCOs and DTOs for admitting the claims.

The CCO/EO has to incur expenditure under planand non plan on quarterly basis where specific orderbeen given by the Finance Department.


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In respect of items which are exempted

from treasury control, the CCO may sendthe distribution statement directly to theSCOs and DTOs for admitting the bills.

GO Ms No. 207/Fin Plan (FW BG) Dept Dt7.12.1997 in relaxation of Treasury controlorders.

The following Departments are exemptedfrom budget control


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1. Raj Bhavan

2. High Court

3. Legislative Assembly4. A.P. Administrative Tribunal

5. All Secretariat Departments

6. APPSC7. Electricity Department

8. Forest Department & PWD LOC through

cheques9. A.P. College Service Commission


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SalariesEx-gratia payments

FTA

Pensions, Gratuities and Commuted ofpension Funeral Charges

Re app op iation ( Pa a 20 4 of B dget Man al ead ith


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Re-appropriation ( Para 20.4 of Budget Manual read withGovt Memo No. 6415-A/184/BG/A1/2002 Dt 11.03.2002)

Re-appropriation of funds from one unit ofappropriation (Detailed head) to another.

Re-appropriation funds between revenue torevenue, capital to capital loan to loan with

in the same grant.

Re-appropriation from Salaries to Salariesand Detailed/Sub detailed Heads to

130/131 Utility Payments from otherDetailed Heads/Sub-Detailed Heads, butnot vice versa


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Re-appropriation are not permitted

From one Grant to another Grant

From Plan to Non-Plan and vice versa

510-Motor vehicles, 530-Major works,

270-minor works, 272-maintenance,

520-machinery equipment, 210 supplies andmaterials from other detailed heads vice versa.

Expenses All anticipated savings should besurrounded before 25th of February with fullexplanations

Supplementary Estimates


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Supplementary Estimates

(Para 20.11 of Budget Manual )

The expenditure which is not covered by thebudget provision due to unavoidablecircumstances, such expenditure is to be

provided in the supplementary Estimates tocover the expenditure by budgetUnforeseen Expenditure A New Service.

during the financial year.


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Reconciliation of Departmental figures with those booked in thetreasuries and the figures booked in the Accountant GeneralsOffice (Para 19 of AP Budget Manual)

CCOSCOs/Unit Officers (All SCOs should furnish reconciledExpr., to CCO by the end of the month.

CCOAGs Office

Reconciliation Certificate to be issued on quarterly basis

The CCO shall get the figures of receipts and expenditureof the entire State and a certificate shall be issued to thePAO

The CAO (designated) has responsibility of reconciling theconsolidated statewide figures of receipts and expenditurewith AG Head wise.


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Performance budget:

A budget which exhibits not only the money

but also the physical targets is aperformance budget. (It should alwaysindicates the physical targets)

Zero based budget:

It is to start from zero base and view allactivities and priorities afresh and create abetter set up of allocations for the comingyear.


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Thank youMrs S. Rupa

9248005307

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