Transcript Budget Presentation at PSCI on 8.4.2013

"Budgeting & Budgetary
Control
in Government of India "
- K. N. JHA, Director,
National Institute of Communication Finance,
Ministry of Communications & IT, GoI
8. 4.2013
What is Budget ?
• The term Budget is actually derived from a French
word BOUGETTE which means a sack or pouch or
leather bag.
• As per the British legacy the Union Budget of India
used to be presented on the evening of last working
day of the month of February to follow the British
Budget. This was discontinued in 2001 when the then
Finance Minister presented it at 11.00 Hrs.
• The Union Budget of India (General Budget) is
presented each year on the last working day of
February by the Finance Minister of India in
Parliament.
Annual Financial Statement
• Under Article 112 of the Constitution of India,
a statement of estimated receipts and
expenditure of the Government of India has to
be laid before Parliament in respect of every
financial year which runs from 1st April to 31st
March.
• This statement titled “Annual Financial
Statement” is the main Budget document.
AFS
• In the Constitution of India the term Budget is
no where used rather it is AFS.
• Annual Financial Statement shows the receipts
and payment of Govt. under three parts in
which Govt. accounts are kept –
1. Consolidated Fund
2. Contingency Fund and
3. Public Account
Consolidated Fund
• All revenues received by Govt.
• Loans raised by Govt.
• Receipts from recoveries of loans granted by
the Govt.
All expenditure of Govt. is incurred from
the Consolidated Fund and no amount can be
withdrawn from the Fund without authorisation
from Parliament.
Contingency Fund
• Occasions may arise when Govt. may have to meet
urgent unforeseen expenditure pending
authorisation from Parliament. The Contingency
Fund is an imprest placed at the disposal of the
President to incur such expenditure.
• Parliamentary approval for such expenditure and for
withdrawal of an equivalent amount from the
Consolidated Fund is subsequently obtained and the
amount spent from Contingency Fund is recouped to
the Fund.
Public Account
• Certain other transactions enter Govt.
accounts in respect of which government act
more as a Banker. For example – transactions
related to Provident Fund, Small savings of
Post offices etc. The money thus received are
kept in Public Account and the connected
disbursement are also made therefrom.
• Parliamentary approval is not required to
operate this fund
• Moneys held by Government in Trust as in the case of
Provident Funds, Small Savings collections, income of
Government set apart for expenditure on specific objects
like road development, primary education,
Reserve/Special Funds etc. are kept in the Public Account.
Public Account funds do not belong to Government and
have to be finally paid back to the persons and
authorities who deposited them.
• Parliamentary authorisation for such payments is,
therefore, not required, except where amounts are
withdrawn from the Consolidated Fund with the approval
of Parliament and kept in the Public Account for
expenditure on specific objects, in which case, the actual
expenditure on the specific object is again submitted for
vote of Parliament for drawal from the Public Account for
incurring expenditure on the specific object.
Preparation of Budget
• By Budget Division of Min. of Finance
• After consulting other Ministries and the
Planning Commission
• Planning Commission plays an important role
in making provision for plan activities of the
government and scrutinizing the plan
proposals of various Ministries / Departments
Government Budget
• Under the Constitution, Budget has to
distinguish expenditure on revenue account
from other expenditure. Govt. Budget thus
comprises of • Revenue Budget
• Capital Budget
Revenue Budget
• Revenue Budget consists of the revenue receipts of
Government (tax revenues and other revenues) and the
expenditure met from these revenues. Tax revenues comprise
proceeds of taxes and other duties levied by the Union. The
estimates of revenue receipts shown in the Annual Financial
Statement take into account the effect of various taxation
proposals made in the Finance Bill. Other receipts of
Government mainly consist of interest and dividend on
investments made by Government, fees, and other receipts for
services rendered by Government.
• Revenue expenditure is for the normal running of Government
departments and various services, interest payments on debt,
subsidies, etc. Broadly, the expenditure which does not result in
creation of assets for Government of India is treated as revenue
expenditure. All grants given to State Governments/Union
Territories and other parties are also treated as revenue
expenditure even though some of the grants may be used for
creation of assets.
Capital Budget
• Capital Budget consists capital receipts and capital
payments.
• The capital receipts are loans raised by Government from
public, called market loans, borrowings by Government
from Reserve Bank and other parties through sale of
Treasury Bills, loans received from foreign Governments and
bodies, disinvestment receipts and recoveries of loans from
State and Union Territory Governments and other parties.
• Capital payments consist of capital expenditure on
acquisition of assets like land, buildings, machinery,
equipment, as also investments in shares, etc., and loans
and advances granted by Central Government to State and
Union Territory Governments, Government companies,
Corporations and other parties.
Budget Timeline
• RE – BE Sept./Oct.
• Draft Budget prepared and finalized
28/29 February
• Budget tabled before Parliament – March
• General discussion on Budget Proposal
March/ April
• Study of DFG by Standing Committee – April
• Detailed discussion on DFG – April
• New Financial Year begins - April
Stages in Budget enactment
1. Presentation of Budget before the Lok Sabha
2. General discussion on the Budget
3. Vote on Account –
Purpose is to keep the govt. functioning
pending voting on the Demand for Grants which
requires sufficiently long time. Vote on Account
is obtained from Parliament through an
Appropriation (Vote on Account) Bill.
Stages in Budget enactment
4. Scrutiny by departmentally related Standing
Committees of Parliament.
5. Voting on Demand for Grants.
6. Passing of Appropriation Bill
7. Passing of Finance Bill (detailing the
imposition, abolition, remission, alteration or
regulation of Taxes proposed in the Budget)
Types of Budgeting
• Zero Based Budget –
It is a method of Budgeting in which all
budgetary allocations are set to nil at the
beginning of financial year.
• Outcome Budget –
This type of Budgeting tries to ensure that
budget outlays translate into concrete outcome.
Physical and quantifiable targets are monitored
through this budgetary exercise.
Types of Budgeting
• Gender Budgeting
Gender Budgeting came into force in
2004 – 05. To contribute towards the
women empowerment and removal of
inequality based on gender, role of
budgeting has been accepted through this
step.
Appropriation Accounts
• The annual accounts of the Government, comprising the
Union Government Finance Accounts and the
Appropriation Accounts, are prepared by the Controller
General of Accounts.
• These documents are presented before the Parliament
after their statutory audit by the Comptroller and Auditor
General of India.
• Preparation and submission of Appropriation Accounts to
the parliament completes the cycle of budgetary process.
• Through Appropriation Accounts parliament is informed
about the expenditure incurred against the appropriations
made by the parliament in the previous financial year. All
the expenditures are duly audited and excesses or savings
in the expenditure are explained.
Budget speech – P. Chidambaram, FM
• Post Offices
• 108.
Government has initiated an
ambitious IT driven project to modernise the
postal network at a cost of `4,909 crore. Post
offices will become part of the core banking
solution and offer real time banking services.
I propose to provide `532 crore for the project
in 2013-14.
Budget in DoP
Particulars
TABLE 1
Revenue and Expenditure
(for the year 2008-09 & 2009-10)
(INR in Million)
Actuals
Actuals
2008-09
2009-10
Revenue
Sale of Stamps
6056.64
Postage Realised in
20364.48
Cash
3382.97
Commission on Money
Orders
28024.60
and Indian Postal Orders
etc.
794.57
Remuneration for Saving
Bank/Saving Certificates
Work.
* Other Receipts
Total
58623.26
% age lnc (+)/
Dec(-) over
previous year
6178.11
20972.82
3398.42
2.01%
2.99%
0.46%
31327.68
11.79%
789.98
-0.58%
62667.01
6.90%
Budget - Deptt. of Posts
Expenditure
General Administration
Operations
Agency Services
**Others
Total Gross
Expenditure
Less Recoveries
Net Expenditure
Deficit (Net Exp Revenue)
5999.55
60359.74
4300.06
26902.95
97562.30
3008.16
94554.14
35930.88
7300.02
82596.64
4225.79
39346.96
133469.41
4389.36
129080.05
66413.04
21.68%
36.84%
-1.73%
46.26%
36.80%
45.92%
36.51%
84.84%
Budgetary control
• A budget is a blue print of a plan expressed in
quantitative terms. Budgeting is a technique
for formulating budgets. Budgetary Control,
on the other hand, refers to the principles,
procedures and practices of achieving given
objectives through budgets.
Budgetary control
• Maximization of Output / Profit: The budgetary
control aims at the maximization of output. To achieve
this aim, a proper planning and co-ordination of
different functions is undertaken. There is proper
control over various capital and revenue expenditures.
The resources are put to the best possible use.
• Co-ordination: The working of the different
departments and sectors is properly co-ordinated. The
budgets of different departments have a bearing on
one another. The co-ordination of various executives
and subordinates is necessary for achieving
budgeted targets.
Budgetary control
• Specific Aims: The plans, policies and goals are decided by
the top management. All efforts are put together to reach
the common goal of the organization. Every department is
given a target to be achieved (RFD). The efforts are directed
towards achieving some specific aims. If there is no definite
aim then the efforts will be wasted in pursuing different
aims.
• Tool for Measuring Performance: By providing targets to
various departments, budgetary control provides a tool for
measuring managerial performance. The budgeted targets
are compared to actual results and deviations are
determined. The performance of each department is
reported to the top management. This system enables
the introduction of management by exception.
Budgetary control
•
Economy: The planning of expenditure will be systematic and there
will be economy in spending. The finances will be put to optimum
use. The benefits derived for the concern will ultimately extend to
industry and then to national economy. The national resources will
be used economically and wastage will be eliminated.
• Determining Weakness: The deviations in budgeted and actual
performance will enable the determination of weak spots. Efforts
are concentrated on those aspects where performance is less than
the stipulated.
• Corrective Action: The management will be able to take corrective
measures whenever there is a discrepancy in performance. The
deviations will be regularly reported so that necessary action is
taken at the earliest. In the absence of a budgetary control system
the deviation can determined only at the end of the financial
period.
• Re- allocation of Budget in time is an important aspect.
Budgetary control
• Consciousness: It creates budget consciousness
among the employees. By fixing targets for the
employees, they are made conscious of their
responsibility. Everybody knows what he is
expected to do and he continues with his work
uninterrupted.
• Reduces Costs: In the present world on economy
measures budgetary control has a significant role
to play. Every government tries to reduce the cost
of development and growth. This is possible by
effective budgetary control.
Who controls Budget in the Govt.?
•
•
•
•
•
•
•
Parliament
Standing Committee of Parliament
Planning Commission of India
Administrative Head of the Ministry/Deptt.
Financial Advisors
Media
Public
Summary of General budget
• The Finance minister of India presents the
annual Union Budget (Annual Financial
Statement) in the Parliament on the last working
day of February. The budget has to be passed by
the Lok Sabha before it can come into effect on 1
April, the start of India's fiscal year. The Union
budget is preceded by an economic survey which
outlines the broad direction of the budget and
the economic performance of the country for the
outgoing financial year.
Thank You
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