Indian Budget Process Quiz
29 Questions
5 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which individual presented the first budget of independent India?

R.K. Shanmukham Chetty presented the first budget of independent India.

What is the main purpose of the 'annual financial statement' or budget?

The budget is an 'annual financial statement' which outlines the estimated receipts and expenditures of the government for the upcoming financial year.

What significant change occurred in 1999 regarding budget presentation time?

In 1999, the budget presentation time was changed from 5:00 PM to 11:00 AM to align with the working hours of the government and financial markets.

What does the 'Economic Survey' document that is prepared by the Economic Division of the Department of Economic Affairs focus on?

<p>The 'Economic Survey' document focuses on providing an overview of the Indian economy, highlighting key economic trends and issues.</p> Signup and view all the answers

How has the budget presentation date been adjusted in recent years?

<p>The budget presentation date has been moved from the last day of February to the first day of February in 2017 to allow for better expenditure planning.</p> Signup and view all the answers

What is the purpose of the Demands for Grants?

<p>Demands for Grants are used to submit the estimates of expenditure from the Consolidated Fund of India that are not 'charged' upon the Fund. They are submitted to the Lok Sabha for voting.</p> Signup and view all the answers

What is the difference between 'charged' expenditure and expenditure 'made' from the Consolidated Fund of India?

<p>'Charged' expenditure is non-votable by Parliament, meaning it only needs discussion. 'Made' expenditure requires voting by Parliament.</p> Signup and view all the answers

Give three examples of items that fall under 'charged' expenditure.

<p>Examples include salaries of the President, salaries of Supreme Court judges, and interest payments on government loans.</p> Signup and view all the answers

What is the role of the Appropriation Bill in the budget process?

<p>The Appropriation Bill is introduced after the Lok Sabha discusses and approves the Demands for Grants. It authorizes the government to spend the sanctioned funds.</p> Signup and view all the answers

What is the purpose of the Finance Bill?

<p>The Finance Bill implements the government's tax proposals, ensuring the required revenue for the budget.</p> Signup and view all the answers

What is the role of the Rajya Sabha in the passage of Appropriation and Finance Bills?

<p>The Rajya Sabha can suggest changes to these bills, but the Lok Sabha has the final authority on whether to accept them.</p> Signup and view all the answers

What is the significance of the Finance Bill being a Money Bill?

<p>Money Bills originate in the Lok Sabha and the Rajya Sabha's role is limited to recommending changes. The Lok Sabha has the final say on their passage.</p> Signup and view all the answers

What is the purpose of the Macro-Economic Framework Statement (MEFS)?

<p>MEFS provides an overview of the Indian economy, including assessment of GDP growth rate, central government fiscal balance, and external sector balance.</p> Signup and view all the answers

What are three economic indicators assessed in MEFS?

<p>MEFS assesses GDP growth rate, fiscal balance of the central government, and the external sector balance of the economy.</p> Signup and view all the answers

What are the three-year rolling targets set by the Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement?

<p>The Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement sets three-year rolling targets for key fiscal indicators related to GDP, including fiscal deficit, revenue deficit, primary deficit, tax revenue, non-tax revenue, and central government debt.</p> Signup and view all the answers

What are the two broad categories under which expenditures are categorized in the Expenditure Budget?

<p>Expenditures in the Expenditure Budget are categorized under two broad umbrellas: Centre's Expenditures and Transfers to States/Union Territories (UTs)</p> Signup and view all the answers

What is the purpose of the "Output Outcome Monitoring Framework"?

<p>The &quot;Output Outcome Monitoring Framework&quot; aims to have clearly defined outputs and outcomes for various Central Sector Schemes and Centrally Sponsored Schemes, with measurable indicators and specific targets for the fiscal year.</p> Signup and view all the answers

What is the largest source of revenue for the government, based on the provided information?

<p>Borrowing and Other Liabilities contribute the most to government revenue, accounting for 24% of the total.</p> Signup and view all the answers

What is the second-largest expenditure category in the government's budget?

<p>Interest payments are the second-largest expenditure category, accounting for 20% of the total government spending.</p> Signup and view all the answers

What is the largest contributor to government revenue after borrowing and other liabilities?

<p>Income tax contributes the second-most to government revenue, accounting for 22% of the total.</p> Signup and view all the answers

What is the largest expenditure category in the government's budget?

<p>The largest expenditure category is States' share of Taxes and Duties, accounting for 22% of the total government spending.</p> Signup and view all the answers

What are the key fiscal indicators related to GDP that the Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement sets targets for?

<p>The key fiscal indicators related to GDP that the Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement sets targets for include fiscal deficit, revenue deficit, primary deficit, tax revenue, non-tax revenue, and central government debt.</p> Signup and view all the answers

What is the FRBM Act and what is its role in the government's fiscal policy?

<p>The FRBM Act, or Fiscal Responsibility and Budget Management Act, instructs the government to assess growth prospects for the economy based on specific underlying assumptions, guiding the government's fiscal policy.</p> Signup and view all the answers

When is the budget presented in Parliament?

<p>On the first working day of February at 11:00 AM.</p> Signup and view all the answers

Who introduces the budget in the Lok Sabha?

<p>The Finance Minister.</p> Signup and view all the answers

What happens on the day the budget is presented?

<p>No discussion on the budget takes place.</p> Signup and view all the answers

What are the two main stages of the budget discussion?

<p>General discussion and detailed discussion.</p> Signup and view all the answers

Which articles of the constitution pertain to the budget process?

<p>Article 112, Article 113, Article 114, and Article 110.</p> Signup and view all the answers

What follows the detailed discussion of the budget?

<p>Voting on the Appropriation and Finance Bill.</p> Signup and view all the answers

Flashcards

First Budget of India

Introduced on April 7, 1860, by the East India Company.

First Budget of Independent India

Presented by R.K. Shanmukham Chetty on November 26, 1947.

Budget Presentation Time

Changed to 11:00 AM in 1999 for market alignment.

Budget Date Advance

In 2017, the presentation date was moved to February 1.

Signup and view all the flashcards

Budget Definition

An annual financial statement of estimated government receipts and expenditures.

Signup and view all the flashcards

Budget Introduction

The budget is presented in Parliament's first working day of February at 11:00 AM by the Finance Minister.

Signup and view all the flashcards

Lok Sabha Speech

The Finance Minister introduces the budget in Lok Sabha through a speech before presenting it to Rajya Sabha.

Signup and view all the flashcards

Budget Discussion

No discussion on budget occurs on the day of its presentation: only general and detailed discussions take place afterward.

Signup and view all the flashcards

Budget Stages

Stages of budget discussion include general discussion, detailed discussion, and voting.

Signup and view all the flashcards

Appropriation Bill

The bill that allows for the allocation of funds proposed in the budget once it is passed.

Signup and view all the flashcards

Finance Bill

The bill required to implement tax adjustments and revenue measures proposed in the budget.

Signup and view all the flashcards

Examination by DRSC

Demands for Grants are examined by the Demand for Grants Standing Committee before presenting reports to Lok Sabha.

Signup and view all the flashcards

Demand for Grants

Estimates of non-charged expenditure submitted for Lok Sabha vote.

Signup and view all the flashcards

Charged Expenditure

Non-votable expenditures that can only be discussed by Parliament.

Signup and view all the flashcards

Examples of Charged Expenditure

Includes President's emoluments, judges' salaries, and loan repayments.

Signup and view all the flashcards

Finance Bill Timeline

Must be passed within 75 days after introduction in Lok Sabha.

Signup and view all the flashcards

Money Bills

Both Appropriation and Finance Bills categorized as Money Bills.

Signup and view all the flashcards

Rajya Sabha's Role

Can recommend changes to Money Bills but Lok Sabha decides.

Signup and view all the flashcards

Macro-Economic Framework Statement (MEFS)

Overview statement assessing GDP, fiscal balance, and external sector.

Signup and view all the flashcards

FRBM Act, 2003

Legislation aimed at fiscal responsibility and budget management in India.

Signup and view all the flashcards

Fiscal Policy Strategy Statement

Outlines government’s medium-term fiscal strategy and targets.

Signup and view all the flashcards

Fiscal Deficit

The gap between the government's total revenue and total expenditure.

Signup and view all the flashcards

Revenue Deficit

Occurs when the government's revenue is less than its expenditures.

Signup and view all the flashcards

Primary Deficit

Fiscal deficit minus interest payments on previous debts.

Signup and view all the flashcards

Output Outcome Monitoring Framework

Framework to evaluate outputs and outcomes of government schemes.

Signup and view all the flashcards

Central Sector Schemes

Programs fully funded by the central government.

Signup and view all the flashcards

Revenue Sources

Various channels through which government earns revenue.

Signup and view all the flashcards

Expenditure Classification

Categorization of government spending into specific sectors.

Signup and view all the flashcards

Study Notes

Indian Budget 2025

  • The Union Budget 2025 is presented by the Finance Minister, Nirmala Sitharaman.
  • This will be her 8th consecutive presentation.
  • Previous finance ministers Chidambaram and Mukherjee had presented nine and eight budgets, respectively, under different Prime Ministers.
  • The budget is an annual financial statement of the estimated government receipts and expenditures for the forthcoming financial year.
  • The Indian Constitution does not mention the word "budget."
  • Article 112 of the constitution mandates the President to ensure a statement of estimated receipts and expenditure is presented to Parliament before the financial year commences.
  • This is referred to as the Annual Financial Statement.
  • The Budget Division of the Department of Economic Affairs, under the Ministry of Finance, prepares the Union budget.
  • The Economic Survey is prepared under the guidance of the Chief Economic Adviser.
  • The Budget is compulsory for all states. (Article 202)
  • The budget is a tool of fiscal policy for the government.

Pre-Independence

  • The first budget of India was introduced on April 7, 1860 by James Wilson, for the East India Company to the British Crown.

Post-Independence

  • The first budget of independent India was presented on November 26, 1947 by R.K. Shanmukham Chetty.
  • The budget covered the period from August 15, 1947 to March 31, 1948.

Budget Changes

  • The budget was originally presented at 5:00 PM. This practice changed in 1999 when Yashwant Sinha presented the budget at 11:00 AM, to align with the government's and financial markets' working hours.
  • In 2017, the government advanced the budget presentation date from the last day of February to the first day of February to allow for better expenditure planning and utilization of funds from the beginning of the financial year.
  • Budget for Railways was presented separately until 2017. The practice was discontinued, and the Railway Budget merged with the General Budget.

Budget Procedure

  • The budget is presented in Parliament on the first working day of February, at 11:00 AM.
  • Introduced in Lok Sabha by the Finance Minister by means of a speech.
  • Then, the presented budget moves to Rajya Sabha.
  • No discussion on the budget takes place on the day of the presentation.
  • Budget discussion occurs in two stages.
    • General discussion and
    • Detailed discussion
  • Demands for Grants are examined by the Department of Revenue and the related reports are presented to the Lok Sabha.

Budget Documents

  • Besides the Finance Minister's Budget Speech, the following other documents are presented to Parliament. Some are mandated by law.
    • Annual Financial Statement (AFS)
    • Demands for Grants (DGs)
    • Finance Bill
    • Fiscal Policy Statements mandated by the Fiscal Responsibility and Budget Management (FRBM) Act, 2003
    • Macro-Economic Framework Statement
    • Expenditure Budget
    • Receipt Budget
    • Expenditure Profile
    • Budget at a Glance
    • Memorandum Explaining the Provisions in the Finance Bill
    • Output Outcome Monitoring Framework
    • Key Features of Budget 2025-26
    • Implementation of Budget Announcements 2024-25

Government Accounts

  • Government accounts are maintained in three parts:
    • Consolidated Fund of India,
    • Contingency Fund of India, and
    • Public Account of India

Consolidated Fund of India (CFI)

  • The CFI operates under Article 266 of the Constitution.
  • It holds all government revenues.
  • All government expenditures are incurred from the CFI.
  • No amounts can be withdrawn without the prior approval of the Parliament.

Contingency Fund of India (CFI)

  • The CFI is based on Article 267.
  • It is used to meet urgent and unforeseen expenses before the Parliament can authorize them.
  • The fund is controlled by the President of India.
  • The government can immediately use funds for emergencies.
  • The Parliament's approval for the expenditures is sought later.
  • Funds are allocated from the Consolidated Fund of India to replenish the Contingency Fund once the Parliament approves the emergency expenditures.
  • The authorized corpus of the fund is ₹30,000 crore.

Public Account of India

  • The Public Account is operated under Article 266 of the Constitution.
  • Government holds the funds in trust for specific purposes or on behalf of others.
  • Types of funds held:
    • Provident Funds
    • Small savings collections
    • Receipts for specific purposes (e.g., road development, primary education)
    • Other Reserve funds
  • Funds in the Public Account do not belong to the government; they belong to depositors (individuals/authorities), and are meant to be returned.
  • Funds can be used only through the approval of the President.

Capital Receipts

  • Capital receipts reduce assets or increase government liabilities.
  • These receipts are not recurring in nature.
  • Examples: Recovery of loans, disinvestment, borrowing from the market/RBI, Provident Funds, etc.

Revenue Receipts

  • Revenue receipts do not create any liability or reduce assets.
  • Revenue receipts are regular and recurring sources of income for the government.
  • Examples: Income Tax, GST, Corporation Tax, Union Excise Duties, Customs, etc.

Revenue Expenditure

  • Revenue expenditures support the daily functioning of government.
  • These expenditures pertain to various schemes.
  • These expenditures are ongoing and recurring.
  • Examples: Salaries, wages, pensions, subsidies, interest payments, and welfare payments.

Capital Expenditure

  • Capital expenditures create assets or reduce government liabilities.
  • These expenditures are non-recurring.
  • Examples: Repayment of loans, expenditure on acquiring capital assets, and nationalization.

Budget Procedure:

  • The Budget is presented to Parliament by the Finance Minister.
  • The Finance Bill is submitted after discussion in the Lok Sabha, but reviewed later in the Rajya Sabha.
  • Parliament needs to approve both the Appropriation and Finance Bills within 75 days.
  • Macro-Economic Framework Statement (MEFS): - Includes an assessment that overviews the economy, including the GDP growth rate, fiscal balance of the central government, and the external sector balance.
  • Fiscal Deficit: The excess of government expenditure over government receipts.
  • Revenue Deficit: The excess of government revenue expenditure over government revenue receipts.
  • Effective Revenue Deficit: Takes into consideration the grants in aid made for capital assets.
  • Ways and Means Advances (WMA): Introduced to replace Ad-hoc treasury bills. A short-term loan from the RBI to cover temporary differences between government receipts and expenditures.

Budget Deficits

  • Budgetary Deficit: The excess of government expenditure over total receipts.
  • Primary Deficit: Fiscal Deficit - Current Interest Borrowings

Methods of Parliamentary Control Over Public Finance

  • Placing Annual Financial Statement before Parliament
  • Withdrawing money from the Consolidated Fund of India (after approval).
  • Supplementary Grants and Vote on Account
  • Periodic/Mid-year review of programs, using macroeconomic forecasts from a Parliamentary Budget Office
  • Introducing the Finance Bill

Other Important Notes

  • The Finance Minister presents the budget followed by related documents.
  • The Macro Economic Framework Statement is mandated by long-standing convention.
  • The budget document shows how tax and revenue expenditures are planned.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

Indian Budget 2025 PDF

Description

Test your knowledge on the Indian budget process and its key components. This quiz covers historical aspects, significant changes, and the roles of various bills and documents in the budget system. Prepare to explore the intricacies of budget presentation and economic statements in independent India.

More Like This

Use Quizgecko on...
Browser
Open
Browser
Browser