Indian Budget 2025 PDF

- Budget 2025 Pre-Independence : First Budget: The first budget of India was introduced on April 7, 1860, by the East India Company to the British Crown. James Wilson Post - Independence : First Budget of Independent India: R.K. Shanmukham Chetty presented th...

- Budget 2025 Pre-Independence : First Budget: The first budget of India was introduced on April 7, 1860, by the East India Company to the British Crown. James Wilson Post - Independence : First Budget of Independent India: R.K. Shanmukham Chetty presented the first budget of independent India on November 26, 1947. This budget covered the period from August 15, 1947, to March 31, 1948, marking the beginning of India's fiscal year adjustments.  Presentation : Some changes in Budget Budget Timing : Initially presented at 5:00 PM, the tradition changed in 1999 when Yashwant Sinha, the then Finance Minister, presented the budget at 11:00 AM to align with the working hours of the government and financial markets.  Budget Date : 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. Railway Budget Merger : Until 2017, the Railway Budget was presented separately from the General Budget. This practice was discontinued, and the Railway Budget was merged with the General Budget.  Finance Minister Nirmala Sitharaman will present her 8th straight budget in 2025, the highest in a row under PM Narendra Modi. She nears the record of 10 budgets presented by Morarji Desai. Budget Budget is an 'annual financial statement' of the estimated receipts and expenditure of the government for the forthcoming financial year. Constitution does not mention the word 'budget'.  As per Article 112 of the constitution, the President shall ensure that a statement of the estimated receipts and expenditure of the Government of India is presented before both the houses of the Parliament before the commencement of each financial reforms. Such statement is referred to as the "annual financial statement''  Union budget is prepared by the Budget Division of the Dept of Economic affairs under Ministry of Finance. Economic Survey on the other hand is prepared by the Economic Division of the Dept of Economic Affairs under the overall guidance of Chief Economic Adviser. Budget is compulsory for states as well as per the Article 202. Budget is a tool of Fiscal Policy of the government. If the budget is not passed in Parliament, it signifies that the government has lost the confidence of the legislature, leading to the resignation of the Prime Minister. 112 202  ster Article 265: No tax shall be levied or collected except by the authority of law. Article 266: No expenditure can be incurred without legislative authorization. ↳ Government takes the approval of the parliament for the taxes/receipts through the Finance Bill and the approval for the expenditures through the Appropriation Bill. ⑮  Outcome Outlays Output Types of Budget (Based on Time Period) 1. Full Budget: Contains the government’s estimate for expenditure and receipts for the entire financial year. 2. Interim Budget: Presented during an election year, covering both expenditure and receipts but only for a part - of the year. Provides a complete financial statement similar to a full budget. The new government prepares the full budget after formation. No constitutional obligation to present an interim budget; it is an unwritten convention. 3. Vote-on-Account: Used when the budget has not been passed, allowing the government to meet expenses. Constitution authorizes Lok Sabha to grant an advance for estimated expenditure until the budget is approved. Deals only with the expenditure side of the budget. Vote on account is the process where an outgoing government seeks interim permission from the Parliament to withdraw funds from the Consolidated Fund of India and spend money on expenditures and crucial government schemes for a few months until a new government is formed after the elections. As defined by Article 116 of the Indian Constitution, vote on account is a grant in advance for the Central government to meet short-term expenditure. 'Vote on Account' deals only with the expenditure side of the government's budget. Through ‘Vote on Account', the government obtains the vote of the Parliament for a sum sufficient to incur expenditure on various items for a part of the year.  Feb Morch April May Earlier : t 2014-25 M 2025 26 y - Budget Budget introduced passed Vota-on-account & 3 Feb Morch April May 20-25 # 2025 26 - Now Vote-on-account not Budget Budget introduced required passed Budget Procedure Presented in Parliament on the first working day of February at 11:00 AM. Introduced in Lok Sabha by the Finance Minister through a speech. After the speech, it is presented in Rajya Sabha. No discussion on the budget takes place on the day of presentation. Budget Discussion Stages General discussion Detailed discussion  House is adjourned General Discussion & Budget Voting Appropriation Finance "Discussion on , - > & Presentation Bill DFGs for Grants ⑰ Demand are DRSC examined by ↓ Reports are presented to the Lok Sabha  a Bud > Article 112 > Article 113 , 114 > Article 110 A. 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. The receipts and disbursements are shown under three parts in which Government Accounts are kept viz., & (i) The Consolidated Fund of India, T (ii) The Contingency Fund of India and (iii) The Public Account of India. N RE Consolidated Fund of India (CFI) Existence: Draws from Article 266 of the Constitution. Composition: -Revenues received by the government. -Loans raised by the government. -Receipts from recoveries of loans granted by the government. Use : All government expenditure is incurred from the CFI. Parliamentary Authorization: No amount can be withdrawn without Parliament's approval. Contingency Fund of India Authorization: Article 267 of the Indian Constitution establishes the Contingency Fund of India. Purpose: This fund is used for urgent and unforeseen government expenses that arise before Parliament can authorize these expenditures. Control: The fund is under the control of the President of India. Process: The government can immediately use funds for emergencies. Parliament's approval for these expenditures is sought after the fact (ex-post-facto). Recoupment: Once Parliament approves the emergency expenditures, an equivalent amount is taken from the Consolidated Fund of India to replenish the Contingency Fund. Current Size: The authorized corpus of the Contingency Fund is ₹30,000 crore. Public Account Basis of Existence: The Public Account is established under Article 266 of the Constitution of India. Purpose: It holds funds that the government manages in trust for specific purposes or on behalf of others. Types of Funds: -Provident Funds. -Small Savings collections. -Receipts earmarked for expenditure on specific objectives (e.g., road development, primary education). -Other Reserve/Special Funds. Ownership: Funds in the Public Account do not belong to the government but to the depositors (individuals, authorities) and are meant to be paid back to them. B CAMPA Fund Part of the Public Account of India  ① No demand for a grant shall be made except on the recommendation of the President. B. Demand For Grants : Clause (2) of Article 113 of the Constitution requires that “so much of the estimates of expenditure from the Consolidated Fund of India included in the Annual Financial Statement as are not ‘charged’ on the Fund shall be submitted in the form of Demands for Grants for the vote of the Lok Sabha” ⑭ editre a As Charged Expenditure The budget consists of two types of expenditure–the expenditure ‘charged’ upon the Consolidated Fund of India and the expenditure ‘made’ from the Consolidated Fund of India. ⑯ The charged expenditure is non-votable by the Parliament, that is, it can only be discussed by the Parliament, while the other type has to be voted by the Parliament. Charged Expenditures: -Emoluments of the President of India. -Salaries and allowances of the Chairman and Deputy Chairman of the Rajya Sabha. -Salaries and allowances of the Speaker and Deputy Speaker of the Lok Sabha. -Salaries, allowances, and pensions of the Judges of the Supreme Court. -Salaries and allowances of the Comptroller and Auditor- General of India and the Central Vigilance Commission. -Interest on and repayment of loans raised by the Government. -Payments made to satisfy court decrees. The Appropriation Bill is introduced only after the Demand for Grants has been discussed and approved by the Lok Sabha Finance Bill Under Article 110 to implement the government's taxation proposals. Introduced in Lok Sabha immediately after the General Budget presentation but taken up for consideration and passing after the Appropriation Bill is passed. Parliament must pass the Finance Bill within 75 days of its introduction.  Both Appropriation and Finance Bills are Money Bills. Sent to Rajya Sabha, which can recommend changes, but Lok Sabha decides whether to accept them. If Lok Sabha rejects Rajya Sabha’s recommendations, the bill is still deemed to be passed. Ats fat ⑭ 41. Macro- Economic Framework Statement (MEFS) The statement contains an overview of the economy. · This includes an assessment regarding the GDP growth rate, fiscal balance of central government and the external sector balance of the economy. · GDP · current Account · Inflation Balance Export Import · Money · · forey Reserves supply  This is under Section 3(5) of FRBM Act, 2003. FRBM Act instructs government to make an assessment of growth prospects for the economy with regards to specific underlying assumptions. D2. The Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement -Purpose: Outlines government's fiscal strategy for the medium term. Features: Sets three-year rolling targets for key fiscal indicators related to GDP, including: - -Fiscal Deficit -Revenue Deficit -Primary Deficit -Tax Revenue -Non-tax Revenue ⑪ ~ -Central Government Debt Rest of documents : The Expenditure Budget is a comprehensive document that consolidates and presents the financial allocations for various schemes and programs across different sectors of the government on a net basis, both Revenue and Capital, at one place. Classification: Expenditures are categorized under two broad umbrellas: -Centre's Expenditures -Transfers to States/Union Territories (UTs). E part Top ↳ The “Output Outcome Monitoring Framework” will have clearly defined outputs and outcomes for various Central Sector Schemes and Centrally Sponsored Schemes with measurable indicators against them and specific targets for FY 2024-25. ⑪s  - est ↳ 00 O Revenue (in Decreasing Order) 1. Borrowing and Other Liabilities (24%) 2. Income Tax (22%) 3. GST and other taxes (18%) 4. Corporation tax (17%) 5. Non-Tax Receipts (9%) 6. Union Excise Duties (5%) 7. Customs (4%) 8. Non-Debt Capital Receipts (1%) Expenditure (in descending Order): 1. States' share of Taxes and Duties (22%) 2. Interest Payments (20%) 3. Central Sector Schemes (16%) excluding defense and subsidies 4. Finance Commission and other transfers (8%) 5. Centrally Sponsored Schemes (8%) 6. Defence (8%) 7. Major Subsidies (6%) 8. Pensions (4%) 9. Other Expenditure (9%) Structure of budget  ↳ ↑ Structure of budget vis O 34 2. Lath Crore 16. 4 lakh core Estimates crore lath more Budget (2025-26) Revenue Receipt : These Receipts neither creates any liability nor reduces an asset. They are regular source of income for government and recurring in nature  It includes: 1. Tax Revenue: Income Tax > GST > Corporation Tax > Union Excise Duties > Customs, etc. 2. Non-tax revenue: Profits and dividends from PSU’s, fiscal and general services (like post, railways), interest on loan forwarded by government, fees penalties, fines, gifts, grants and donations, etc Capital Receipts These receipts either creates liability or results in reduction of asset They are non-recurring and non-routine in nature Includes: Recovery of Loans, Disinvestment, Borrowing from market or RBI, Provident Fund CRLDYL - EE - CR - - V Expenditure : Revenue Expenditure Expenditures spent on day to day functioning of organs of the state and for providing various schemes It represents recurring expenditure on day to day operational activities Includes: Salaries, wages, pensions, subsidies, and interest payments, welfare payments, etc.  X Capital Expenditure Expenditure that creates any asset or reduces any liability of the government. It represents non-recurring expenditure ⑳ Includes: Repayment of loans, expenditure on - acquiring capital assets, nationalisation, Capital Expenditure 2024-25 (RE) :  - - 0 & O Every 100 pe Capex return pe returns 100Rs Revenue expenditure < 100 Rs. - - ↓ Budgetry Deficits  redundant Budget Deficit now Budget Deficit = Total expenditure - Total receipts = Ad-hoc treasury bills u Ad-hoc treasury bills are issued by the central government to RBI. They enable government to cover temporary time lag between the receipts and expenditures.  However government used them for permanent borrowing which was leading to unintentional monetization of deficit (printing of currency). Ad-hoc treasury bills were abandoned in 1997 and since then concept of Budget Deficit has become redundant in India Ways and Means Advance (WMA) It was introduced in 1997 to replace Ad-hoc treasury bills and comes under Section 17(5) of the RBI Act of 1934. Under WMA, RBI provides short term loans to ⑮ central and state governments to enable them to cover the temporary mismatch between their receipts and ① expenditure similar to overdraft facility.  The government can avail immediate cash from the RBI. But it has to return the amount within 90 days. Interest is charged at the existing repo rate. Fiscal Deficit It is the excess of total expenditure over total receipts (excluding the borrowings) of the government over a financial year. It is indication of total borrowings needed by government. ⑮it determi Borowings & extal free a Remin eipts Capital Borrowings = ⑭ # Fiscal the Deficit over years : Target : 4. 5% by 2025- 2 Fiscal Deficit 2024 - 25 (RE) > - 4. 8 % 2025 - 26 (BE) - 4 4%. prioritising Government is macroeconomic stability. The fiscal deficit target is 4.1 per cent of GDP for FY2025-26 (FY26) The finance minister also reiterated the commitment to bring the deficit down below 4.5 per cent of GDP by FY2025-26 (FY26). More encouragingly, this is coming largely from a cut in the revenue deficit  its Tax buoyancy is helping centre to aligh with roadmap of fiscal consolidation. Tox 24(RE) > - 1 2 buoyancy 2023 -. 11 2024 - 25 (BE) > - Counter-cyclical fiscal strategy : Governments should spend more when private firms and households do not feel confident and hold back spending. Once private firms and households feels confident, the government should dial back on its expenditure. This counter-cyclical fiscal strategy smoothens growth and makes it more sustainable. While governments, especially democratically elected ones, find the first part easy to do, they are generally reluctant to step back when the economy recovers. Revenue Deficit Revenue deficit = Revenue Exp- Revenue Receipts It shows the extent of reduction in assets and/or increment in liabilities of the government for meeting its current consumption expenditure. It is undesirable concept of budgetary deficit. FRBMA Act 2002 asked for the elimination of Revenue Deficit. Effective Revenue Deficit -- Effective Revenue Revenue Grants in aid for Deficit Deficit capital assets Central government transfer grants to state, part of which is utilised for creation of capital assets. All Grants are however added to Revenue Expenditure.  Grantstostate Revchit in Effective RD = assets ⑰ -⑧ Revenue Exp-Revenue Receipts ↳ Interests Salaries Revenue Exp. ants · cital Exp. Primary Deficit Primary Deficit = Fiscal Deficit (Current borrowings) – Interest payments (of previous borrowings) It indicates the fiscal situation of the government during the current financial year ignoring the debt burden of the past. It shows extent to which government is further increasing or decreasing debt burden of the past.  Example : Revenue Expenditure 100 100 + 76 so + 20 T Interest Payment Borrowing Fiscal Deficit = 24 24-20 4 Deficit = Primary = = Extent to which govt , is borrowing to meet its current s expense A high primary deficit means the government is borrowing not just to pay interest but also to finance current expenditures. ⑨ Indicates excessive government spending beyond revenues, leading to debt accumulation. A zero or negative primary deficit suggests that borrowings are primarily for paying interest on past debt rather than new spending. · 3 Budget-