MEANING OF BUDGET BUDGET (FROM FRENCH WORD BOUGETTE, PURSE) GENERALLY REFERS TO A LIST OF ALL PLANNED EXPENSES AND REVENUES. ...AN ANNUAL PROPOSAL THAT OUTLINES THE ANTICIPATED FEDERAL REVENUE AND DESIGNATES PROGRAM EXPENDITURES FOR THE UPCOMING FISCAL YEAR.

DEFINITIONSTAYLOR A BUDGET IS THE MASTER FINANCIAL PLAN OF THE GOVERNMENT. IT BRINGS TOGETHER ESTIMATES OF ANTICIPATED REVENUE AND PROPOSED EXPENDITURE FOR THE BUDGETED YEARS.

According to BASTABLETHE BUDGET HAS COME TO MEAN THE FINANCIAL ARRANGEMENTS OF A GIVEN PERIOD, WITH THE USUAL IMPLICATIONS THAT THEY HAVE BEEN SUBMITTED TO THE LEGISLATURE FOR APPROVAL

According to FINDLAY SHIRRASTHE BUDGET IS AN ANNUAL STATEMENT OF EXPENDITURE AND REVENUE TO MEET THAT EXPENDITURE PREPARED BY PUBLIC AUTHORITIES AND USUALLY COVERS ATLEAST TWO FISCAL PERIODS-THE CLOSING PERIOD AND THE PERIOD TO COME .

IN THE WORDS OF MUNROBUDGET IS A PLAN OF FINANCING FOR THE INCOMING FISCAL YEAR.THIS INVOLVES AN ITEMISED ESTIMATE OF ALL REVENUES ON THE ONE HAND AND ALL EXPENDITURES ON THE OTHER

A SUMMARY OF THE ABOVE DEFINITIONSON THE BASIS OF THE DEFINITIONS WE CAN STATE THAT A BUDGET IS :

A statement of expected revenue and proposed expenditure;It has to sanctioned by the authority;It is for a particular period-a year;It puts forth conditions regarding the procedures involved in the collection of revenue and the expenditure to be incurred.

MEANING OF BUDGETHENCE A BUDGET IS A STATEMENT OF THE ESTIMATED REVENUE AND EXPENDITURE OF THE GOVERNMENT IN RESPECT TO A PARTICULAR FINANCIAL YEAR.

IMPORTANCE OF BUDGETIt sets a frame work for policy formulationBudgeting is a means of policy implementationA budget is a means of legal controlIt is a tool of accountabilityIt is a tool of managementIt is an instrument of economic policy

BUDGET IS CONCERNED WITH THREE PERIODSTHE ACTUAL REVENUE AND EXPENDITURE OF THE PREVIOUS YEAR [if the current year is 2009-10 then 2008-09 will be the preious year]THE REVISED ESTIMATES OF REVENUE AND EXPENDITURE OF THE CURRENT YEAR.ESTIMATES OF REVENUE AND EXPENDITURE FOR THE NEXT FINANCIAL YEAR.

COMPONENTS OF BUDGETRevenue receiptsCapital receiptsRevenue expenditureCapital expenditure

THUS A BUDGET HAS TWO MAIN COMPONENTS :[A] RECEIPTS ,[B] EXPENDITURE.

COMPONERNTS OF BUDGETRECEIPTSA. REVENUE RECEIPTS [1+2 ] 1. TAX REVENUE 2. NON TAX REVENUEB. CAPITAL RECEIPTS [3+5] 3.RECOVERY LOANS 4.OTHER RECEIPTS 5.BORROWING & OTHER LIABILITIESTOTAL RECEIPTS = A+B

A.REVENUE RECEIPTSD.REVENUE EXPEND.A.1.TAX REVENUE6.ON NON PLAN ACC.2.NONTAX REV7.ON PLAN ACCOUNTB.CAPITAL RECEIPTS.[3+4+5]E.CAPITAL EXP.[8+9]3.RECOVERY OF LOAN8.ON NON PLAN ACC.4.OTHERB RECEIPTS 9.ON PLAN ACCOUNT5.BORROWINGS ANDOTHER LIABILITIESF.TOTAL EXP.[D+E] G.BUDGE.DEFI-F-CH.REV. DEFI D-AC.TOTAL RECEIPTS-A+BI.FISCAL DEFICIT[F_(A+3+4)]

EXPENDITUREEXPENDITUREA. REVENUE EXPENDITURE [1+2] 1 ON PLAN ACCOUNT 2 ON NON PLAN ACCOUNTB.CAPITAL EXPENDITURE

RECEIPT ITEMS OF THE BUDGET

REVENUE RECEIPTS

TAX REVENUETAX REVENUE INCLUDES ALL THE REVENUES EARNED THROUGH VARIOUS KINDS OF TAXES.TAXES ARE BROADLY DIVIDED INTO DIRECT & INDIRECT TAXES.

DIRECT TAXESCORPORATION TAXINCOME TAXINTEREST TAXWEALTH TAXGIFT TAXEXPENDITURE TAX

INDIRECT TAXCUSTOM DUTIESEXCISE DUTIESSALES TAXSERVICE TAX

NON TAX REVENUEIT INCLUDES THE REVENUE ACCRUING TO THE GOVERNMENT FROM SOURCES OTHER THAN TAX.THESE ARE ;

INTEREST RECEIPTSDIVIDENDSGRANTSFINES

CAPITAL RECEIPTSTHESE INCLUDE BORROWING OF THE GOVERNMENT.SINCE THESE RECEIPTS HAVE TO BE REPAID BY THE GOVERNMENT ,THE CAPITAL RECEIPTS ARE LIABILITIES.CAPITAL RECEIPTS INCLUDE PUBLIC BORROWING ,RECIVERY OF LOANS AND RESALE OF SHARES AND BONDS HELD BY THE GOVERNMENT.

EXPENDITURE ITEMS

REVENUE EXPENDITUREIT IS THE EXPENDITURE INCURRED FOR THE DAY-TO-DAY FUNCTIONONG OF THE GOVERNMENT DEPARTMENTS AND VARIOUS SERVICES OFFERED TO THE PEOPLE, PAYMENT OF INTEREST ON BORROWINGS,SUBSIDIES ETC.REVENUE EXPENDITURE WILL NOT RESULT IN THE CREATION OF ASSETS

REVENUE EXPENDITUREIT IS THE EXPENDITURE INCURRED FOR THE DAY-TO-DAY FUNCTIONONG OF THE GOVERNMENT DEPARTMENTS AND VARIOUS SERVICES OFFERED TO THE PEOPLE, PAYMENT OF INTEREST ON BORROWINGS,SUBSIDIES ETC.REVENUE EXPENDITURE WILL NOT RESULT IN THE CREATION OF ASSETS

CAPITAL EXPENDITURECAPITAL EXPENDITURE IS THE EXPENDITURE INCURRED ON CREATING PERMANENT ASSETS.SUCH EXPENDITURE IS INCURRED ON ITEMS LIKE CONSTRUCTION OF BUILDINGS,ROADS,BRIDGES,CANALS,POWER PLANTS,CAPITAL EQUIPMENTS

REVENUE RECEIPTSTHE REVENUE RECEIPTS REFER TO ALL RECEIPTS RECEIVED DURING BY THE GOVERNMENT FRM

TaxationMeaning : Non quid pro quo transfer of private income to public coffers by means of taxes.Classified into

1. Direct taxes- Corporate tax, Div. Distribution Tax, Personal Income Tax, Fringe Benefit taxes, Banking Cash Transaction Tax2. Indirect taxes- Central Sales Tax, Customs, Service Tax, excise duty.

Government ExpenditureIt includes :Government spending on the purchase of goods & services.Payment of wages and salaries of government servantsPublic investmentTransfer payments

EXPENDITURE HEADS- 2009-10 BUDGET

Chart1

18

20

13

9

14

15

4

7

RUPEE GOES TO

Sheet1

b

20

13

9

14

15

4

7

Sheet2

CENTRAL PLAN18

INTEREST PAYMENTS20

DEFENCE13

SUBSIDIES9

OTHER NON-PLAN EXPEN14

STATES' SHARE OF TAXES15

NON-PLAN ASSIST. TO STA4

PLAN ASSISTANCE TO STA7

Sheet2

RUPEE GOES TO

Sheet3

RECEIPTS OF 2009-10 BUDGET

Chart3

29

22

12

10

10

6

10

1

Where does the Rupee come from

Chart1

1

29 22 12 10 10 6 10

RUPEE COMES FROM

Sheet1

BORROWINGS & OTHER LIABILITIES29

CORPORATION TAX22

INCOME TAX12

CUSTOMS10

EXCISE10

OTHER TAXES6

NON-TAX REVENUE10

NON-DEBT CAPITAL1

Sheet1

Where does the Rupee come from

Sheet2

Sheet3

RUPEE COMES FROM2009-10

RUPEE GOES TO

TOTAL RECEIPTS

*

TOTAL EXPENDITURE

BUDGET OF 2011-12

CUSTOMS DUTY

DIRECT TAXES

FISCAL DEFICIT

*