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Comprehensive Discussion on Budget- Section 112, Revenue Receipt, Expenditure (in Hindi)
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Comprehensive coverage on interim Budget (2019)

Komal Shekhawat
Written two UPSC Mains (2017-2018) love to teach and learn.

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Komal Shekhawat
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  2. IHAT WILL VE COVER Introduction about budget Key terminologies on budget . Achievements during 2014-19 . New Announcements of 2019 budget Key message in the Interim Budget 2019-20

  3. About Budget The term 'Budget' is not mentioned in the Indian Constitution the corresponding term used is 'Annual Financial Statement' (article 112) Budget is an Annual Financial Statement of yearly estimated receipts and expenditures of the government in respect of every financial year. Budgeting is the process of estimating the availability of resources and then allocating them to various activities according to a pre-determined priority. Budgets act as instruments of control and act as a benchmark to evaluate the progress of various departments.

  4. g CComponents of Government Budget Revenue Receipts Revenue receipts are divided into tax and non-tax revenues. Tax revenues consist of the proceeds of taxes and other duties levied by the central government. Tax revenues, an important component of revenue receipts, comprise of Direct taxes-which fall directly on individuals (personal income tax) and firms (corporation tax), and Indirect taxes like excise taxes (duties levied on goods produced within the country), customs duties (taxes imposed on goods imported into and exported out of India) and service tax.

  5. Non-tax revenue of the central government mainly consists of o Interest receipts (on account of loans by the central government which constitutes the single largest item of non-tax revenue) o Dividends and profits on investments made by the government o Fees and other receipts for services rendered by the government o Cash grants-in-aid from foreign countries and international organizations are also included The estimates of revenue receipts take into account the effects of tax proposals made in the Finance Bill. A Finance Bill, presented along with the Annual Financial Statement, provides details of the imposition, abolition, remission, alteration or regulation of taxes proposed in the Budget. .

  6. Revenue Expenditure: Revenue expenditure consists of all those expenditures of the government which do not result in creation of physical or financial assets. t relates to those expenses incurred for the normal functioning of the government departments and various services, interest payments on debt incurred by the government, and grants given to state governments and other parties (even though some of the grants may be meant for creation of assets). Budget documents classify total revenue expenditure into Plan and Non-plan expenditure Plan revenue expenditure relates to central Plans (the Five-Year Plans) and central assistance for State and Union Territory Plans. .

  7. Subsidies are an important policy instrument which aim at increasing welfare. Apart from providing implicit subsidies through under-pricing of public goods and services like education and health, the government also extends subsidies explicitly on items such as exports, interest on loans, food and fertilizers.

  8. The Capital Account The Capital Budget is an account of the assets as well as liabilities of the central government, which takes into consideration changes in capital. It consists of capital receipts and capital expenditure of the government. This shows the capital requirements of the government and the pattern of their financing. Capital Receipts: o The main items of capital receipts are loans raised by the government from the public which are called market borrowings, borrowing by the government from the Reserve Bank and commercial banks and other financial institutions through the sale of treasury bills, loans received from foreign governments and international organizations, and recoveries of loans granted by the central government. Other items include small savings (Post-Office Savings Accounts, National Savings Certificates, etc), provident funds and net receipts obtained from the sale of shares in Public Sector Undertakings (PSUs). o

  9. Capital Expenditure This includes expenditure on the acquisition of land, building, machinery, and equipment, investment in shares, and loans and advances by the central government to state and union territory governments, PSUs and other parties. Capital expenditure is also categorized as plan and non-plan in the budget documents. Plan capital expenditure, like its revenue counterpart, relates to central plan and central assistance for state and union territory plans. Non-plan capital expenditure covers various general, social and economic services provided by the government.

  10. Full Budget vs Interim Budget Full Budget: An annual budget is announced in two parts. The part one is the detailed structure of income and expenses prepared by the government in the previous year. Part two is the announcement of future ways to raise funds from taxes and how will it spend them on development in the country in important areas.

  11. Interim Budget: The interim budget is a summary of the income and expenses held last year and the future expenses expected to be held in the next few months until the new government takes charge. However, there is nothing announced on the sources of income in the budget through tax collections. . The process is known as a vote on account, it seeks the nod of the Parliament. After the approval of parliament, the money for the expenses is then given to the Consolidated Fund of India.

  12. 2 C Key terminologies on Budget Annual Financial Statement: Article 112 of the Constitution requires the government to present to Parliament a statement of estimated receipts and expenditure in respect of every financial year, from April 1 to March 31. This statement is called the annual financial statement. Budgetary Deficit: Budgetary deficit is the difference between all receipts and expenses in both revenue and capital account of the government.

  13. Consolidated Fund: This is the most important of all government funds. All revenues raised by the government, money borrowed and receipts from loans given by the government flow into the consolidated fund of India. All government expenditure is made from this fund, except for exceptional items met from the Contingency Fund or the Public Account. Importantly, no money can be withdrawn from this fund without the Parliament's approval. * Contingency Fund: As the name suggests, any urgent or unforeseen expenditure is met from this fund. The Rs 500-crore fund is at the disposal of the President. Any expenditure incurred from this fund requires a subsequent approval from Parliament and the amount withdrawn is returned to the fund from the consolidated *

  14. Union Excise Duty: Duties imposed on goods made in India Service Tax: It is a tax on services rendered. Telephone bill, for instance, attracts a service tax. Direct Tax: Traditionally, these are taxes where the burden of tax falls on the person on whom it is levied. These are largely taxes on income or wealth. Income tax (on corporates and individuals), FBT, STT and BCTT are direct taxes. HLA

  15. Public debt: Public debt receipts and public debt disbursals are borrowings and repayments during the year, respectively. The difference is the net accretion to the public debt. Public debt can be split into internal (money borrowed within the country) and external (funds borrowed from non-Indian sources). Internal debt comprises treasury bills, market stabilisation schemes, ways and means advance, and securities against small savings Treasury bills (T-bills): These are bonds (debt securities) with maturity of less than a year. These are issued to meet short-term mismatches in receipts and expenditure. Bonds of longer maturity are called dated securities. Market stabilization scheme: The scheme was launched in April 2004 to strengthen RBI's ability to conduct exchange rate and monetary management. These securities are issued not to meet the government's expenditure but to provide RBI with a stock of securities with which it can intervene in the market for managing liquidity. HLA

  16. Ways and means advance (WMA): One of RBI's roles is to serve as banker to both central and state governments. In this capacity, RBI provides temporary support to tide over mismatches in their receipts and payments in the form of ways and means advances. Securities against small savings: The government meets a small part of its loan requirement by appropriating small savings collection by issuing securities to the fund. . Fiscal Deficit: When the government's non-borrowed receipts fall short of its entire expenditure, it has to borrow money from the public to meet the shortfall. The excess of total expenditure over total non-borrowed receipts is called the fiscal deficit. HLA

  17. Primary deficit: The revenue expenditure includes interest payments on government's earlier borrowings. The primary deficit is the fiscal deficit less interest payments..A shrinking primary deficit indicates progress towards fiscal health. The Budget document also mentions deficit as a percentage of GDP. FRBM Act: Enacted in 2003, Fiscal Responsibility and Budget Management Act require the elimination of revenue deficit by 2008-09. Hence, from 2008-09, the government will have to meet all its revenue expenditure from its revenue receipts. Any borrowing would only be to meet capital expenditure. The Act mandates a 3% limit on the fiscal deficit after 2008-09. CESS: This is an additional levy on the basic tax liability. Governments resort to cess for meeting specific expenditure.

  18. COUNTERVA LING DUTIES (CVD): Countervailing duty is a tax imposed on imports, over and above the basic import duty. CVD is at par with the excise duty paid by the domestic manufacturers of similar goods EXPORT DUTY: This is a tax levied on exports. In most instances, the object is not revenue, but to discourage exports of certain items. . SURCHARGE: As the name suggests, this is an additional charge or tax.

  19. Farmers Assured MSP of minimum 50% to all 22 crops Interest subvention doubled in last 5 years Soil Health card, Neem coated Urea game changer in farm sector

  20. Poor and Backward Classes 10% reservation for the poor in educational institutions and government jobs Free electricity connection to every household under Saubhagya Yojana . . World's largest healthcare programme, Ayushman Bharat, for nearly 50 crore people Aspirational Districts Programme for development in 115 most backward districts. Rs. 1,70,000 crore spent during 2018-19 for cheaper food grains to poor and middle class 143 crore LED bulbs provided in mission mode with the cooperation of private sector Poor & middle class are saving Rs. 50, 000 crore p.a. in electricity bills due to LED bulbs 10 lakh patients benefited from free treatment under Ayushman Bharat . .

  21. Women development to women led development 6 crore free LPG gas connections provided under Ujwala Yojna ; All 8 crore by next year 70% of MUDRA Loan availed by Women Maternity leave extended to 26 weeks Financial support for pregnant women under Pradhan Mantri Matru Vandana

  22. Youth Over one crore youth trained under Pradhan Mantri Kaushal Vikash Yojana Self-employment boost through MUDRA, STAND-UP and START-UP India Up-to Rs 1 crore loans can be availed in less than an hour 25%-28% is the average savings due to GeM (Government e-Market place) .

  23. Income Tax Tax collections nearly doubled in five yearsfrom Rs. 6.38 Lakh crore in 2013-14 to almost Rs. 12 lakh crore this year 80% growth in tax base-from 3.79 crore to 6.85 crore in five years Tax administration streamlined-Last year, 99.54% of the income-tax returns accepted as were filed Technology intensive project approved to improve assessee friendliness-In two years, returns to be processed in 24 hours and refunds issued simultaneously.

  24. GST GST made India a common market GST led to increased tax base, higher collections and ease of trade Inter-state movements now faster, more efficient, and hassle free Responsive and sensitive reduction of tax rates - Most items of daily use now in the 0% or 5% tax slab. Relieving the businesses and service providers- . Exemptions from GST for small businesses doubled from Rs. 20 lakh to Rs. 40 lakh

  25. Infrastructure Civil Aviation - UDAN Scheme > Number of Operational Airports crossed 100 Latest: Pakyong airport in Sikkim Domestic Passenger traffic doubled in last 5 years Roads India is the fastest highway developer in the world 27 kms of highways built each day > Stuck projects completed - Eastern Peripheral Highway around Delhi- Bogibeel rail-cumroad bridge in Assam and Arunachal Pradesh

  26. Digital India Revolution More than 3 lakh Common Service Centres (CSCs) exist to deliver services to the citizens India now leading the world in the consumption of mobile data Monthly consumption of mobile data increased by over 50 times in the last five years . . . Under Make in India, mobile and parts manufacturing companies increased from 2 to more than 268 providing huge job opportunities

  27. Jan Dhan-Aadhaar-Mobile (JAM) and Direct Benefit Transfer In the last five years, nearly 34 crore Jan Dhan bank accounts openec Aadhaar now near universally implemented Ensure the poor and middle class receive the benefits of Government schemes directly in their bank accounts by eliminating middlemen

  28. stoms and trading across borders Customs duties on 36 capital goods abolished Digitization of import and export transactions RFID technology to improve logistics

  29. Other achievements: Government put a stop to questionable practices of hiding high NPAs Swachh Bharat Mission as the world's largest behavioral change movement .

  30. Labour: Pradhan Mantri Shram Yogi Maandhan scheme to ensure fixed monthly pension to 10 crore unorganized sector workers Mega Pension Yojna. It is expected to be largest in World. >For unorganised sector and organised workers who earns upto Rs. 15000 monthly income. >A fixed pension amount of Rs 3000 per month will be giving after 60 years of age. They will have to pay minimum contribution of Rs 55 starting from age of 18. Minimum premium, means if 29 years old person enters into it, he will have to pay only Rs. 100 per month. Rs. 500 crore for this scheme. Government will contribute equal amount MEIA

  31. Health . 22nd AllMS to be setup in Haryana MGNREGA: Rs. 60, 000 crore allocation for MGNREGA in BE 2019-20

  32. Fiscal Programme Fiscal deficit pegged at 3.4% of GDP for 2019-20 Target of 3% of fiscal deficit to be achieved by 2020-21. Fiscal deficit brought down to 3.4% in 2018-19 RE from almost 6% seven years ago Total expenditure increased by over 13% to Rs.27,84,200 crore in 2019-20 BE Capital Expenditure for 2019-20 BE estimated at Rs. 3,36,292 crore Centrally Sponsored Schemes (CSS) allocation increased to Rs. 3,27,679 crore in BE 2019-20 National Education Mission allocation increased by about 20% to Rs. 38,572 crore in BE 2019-20 . . . .

  33. CPoor and Backward Classes "First right on the resources of country is that of the poor" 25% additional seats in educational institutions to meet the 10% reservation for the poor . Targeted expenditure to bridge urban-rural divide & to improve quality of life irn villages All willing households to be provided electricity connections by March 2019

  34. Vulnerable sections A new committee under NITI Ayog to identify all the remaining De-notified nomadic and semi-Nomadic tribes. New Welfare development Board under Ministry of social justice and empowerment for development and welfare of De-notified nomadic and semi nomadic tribes. Defence: Defence budget to cross Rs 3,00,000 crore for the first time ever

  35. Railwavs: Capital support of Rs.64,587 crore proposed in 2019-20 (BE) from the budget Overall capital expenditure programme to be of Rs. 1,58,658 crore Operating Ratio expected to improve from 98.4% in 2017-18 to 96.2% in 2018-19 (RE) and to 95% in 2019-20 (BE). Entertainment Industry Indian filmmakers to get access to Single window clearance as well for ease of shooting films . Regulatory provisions to rely more on selfdeclaration . To introduce anti-camcording provisions in the Cinematograph Act to control piracy

  36. MSME and Traders: 2% interest subvention on an incremental loan of Rs 1 crore for GST registered SMEs At least 3% of the 25% sourcing for the Government undertakings will be from women owned SMEs Renewed Focus on Internal trade ; DIPP renamed to Department for Promotion of Industries and Internal trade . . Digital Villages: The Government to make 1 lakh villages into Digital Villages over next five years Other Announcement(s): New National Artificial Intelligence portal to support National Program on Artificial Intelligence. HLA