New Delhi: The Union Budget or Annual Financial Statement presented to the Parliament is the most comprehensive statement of the Union government’s receipts and expenditures. While the details of the government’s receipts, which are tax and non-tax revenue collections, interest earning, dividends etc. are arranged in the receipt budget, its expenditures are organized in the expenditure budget.
Article 112 of the Constitution says that the President shall in respect of every financial year cause to be laid before both the Houses of Parliament a statement of the estimated receipts and expenditure of the Government of India for that year. It will be referred to as the Annual Financial Statement.
It also lays down the condition that the expenditure shown in the annual financial statement will separately show the expenditures that required voting in the Parliament and that does not require voting – known as voted and charged expenditure respectively.
Article 112 also stipulates that the revenue expenditure of the government will be shown separately from all other expenditures. Revenue expenditures are those expenditures that do not result in the creation of any kind of assets for the government such as payment of salary and wages, routine expenses, among other things.
Expenditure Budget
All the proposed expenditures of the government in a financial year are presented to Parliament as demands for grants. The provisions made for a scheme or a programme may be spread over a number of major heads in the revenue and capital sections in a demand for grants.
In the Expenditure Budget, the estimates made for a scheme or a programme are brought together and shown on a net basis on revenue and capital basis at one place.
For example, the expenditure of individual ministries and departments are classified under two broad umbrellas. The first one is Central Expenditure and the second expenditure is transferred to states and Union Territories (UTs).
Under the head of central expenditure, there are three sub-classifications. These are establishment expenditures of the union government, second is the expenditure on central sector schemes and third expenditure is other central expenditure. Other central expenditures also include those on central public sector enterprises (CPSE) and autonomous bodies.
Also Read: Union Budget Explained: What is Receipt Budget?
Another head is about the Transfers to States and Union Territories. It is also divided into the following three sub-heads.
While the first category of expenditures is related to the Centrally Sponsored Scheme (CSS), the second category of expenditures has Finance Commission transfers and the third category of expenditures includes other transfers to states.
In order to explain the underlying objectives of every expenditure for various schemes and programmes in the expenditure budget, the government also includes suitable explanatory notes as a rule.
