Annual Budget of India

Annual Budget of India

The Budget of the Government of India, for any year, gives a complete picture of the estimated receipts and expenditures of the Government for that year based on the budget figures of the two previous years.

Figures in Every Budget

Every budget, for instance, gives three sets of figures:

(a) Actual figures for the preceding year

(b) Budget and revised figures for the current year

(c) Budget estimates for the following year

Annual Financial Statement

The Annual Financial Statement shows the receipts and payments of the Government under the three parts in which the Government accounts are kept:

(a) Consolidated Fund

(b) Contingency Fund

(c) Public Account

Consolidated Fund

• All revenues received by the Government, loans raised by it, and also its receipts from recoveries of loans granted by it, form the Consolidated Fund.

• All expenditure of the Government is incurred from the Consolidated Fund, and no amount can be withdrawn from the Fund without authorisation from Parliament.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 the Government 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 the Contingency Fund is subsequently recouped to the Fund.

• According to India 2018, the corpus of the Fund authorised by the Parliament, at present, is Rs. 500 crore.

Public Account

• Besides the normal receipts and expenditure of the Government, which relate to the Consolidated Fund, certain other transactions enter Government accounts, in respect of which, Government acts more as a banker.

For example:

• Provident funds

• Small savings collections

• Other deposits

The moneys thus received are kept in the Public Account, and the connected disbursements are also made therefrom.

Parliamentary authorisation for such payments from the Public Account is, therefore, not required.

Classification of Expenditure

Under the Constitution, the Budget has to distinguish expenditure on revenue account from other expenditure.

Government Budget, therefore, comprises:

(a) Revenue Budget

(b) Capital Budget

Parts of the Annual Budget

The Annual Budget of the Central Government provides estimates of receipts and expenditures of the Government.
The Budget consists of two parts:

1. Revenue Budget

• All 'current receipts' such as taxation, surplus of Public enterprises, and 'expenditures' of the Government.

2. Capital Budget

• All 'Capital receipts' and expenditure, such as domestic and foreign loans, loan repayments, foreign aid, etc.

Reforms in Budget 2017-18

The Budget for 2017-18 contained three major reforms:

1. Advancing the Presentation of the Budget

• The presentation of the Budget was advanced to 1st February to enable the Parliament to avoid a Vote on Account and pass a single Appropriation Bill for 2017-18 before the close of the current financial year.

• This enabled the ministries and departments to operationalise all schemes and projects, including the new schemes, right from the commencement of the next financial year.

2. Merger of Railways Budget with the General Budget

• The merger of the Railways Budget with the General Budget was a historic step.

• The colonial practice, prevalent since 1924, was discontinued.

• This decision brought the Railways to the centre stage of the Government's fiscal policy and facilitated multi-modal transport planning between railways, highways, and inland waterways.

3. End of Plan and Non-Plan Classification

• The plan and non-plan classification of expenditure has been done away with.

• This will give a holistic view of allocations for sectors and ministries and would facilitate optimal allocation of resources. [Source: INDIA 2018]

Final Thoughts

The Budget of India is a vital financial document that reflects the Government’s estimated receipts and expenditures each year. Dividing finances into the Consolidated Fund, Contingency Fund, and Public Account ensures structured management of public money.

The distinction between the Revenue Budget and the Capital Budget highlights the balance between day-to-day operations and long-term asset creation. The reforms introduced in Budget 2017-18 — such as advancing the presentation date, the merger of the Railways Budget, and the removal of plan and non-plan expenditure classification — marked a historic shift towards efficiency and transparency.

The Contingency Fund plays a critical role in addressing unforeseen expenditures, while the Public Account reflects the government’s role as a custodian of people’s savings and deposits.