Union Budget 2018: Know all about important documents, terminologies

While tabling the Budget, the Finance Minister tells the country about government’s revenues and expenditures, besides showing how the government plans to use public resources to meet policy goals.

A Budget is not just a bunch of documents, but it is a comprehensive statement of the government's finances including spending, revenues, deficit and debt, etc for a financial year that runs from April 1 to March 31.

While tabling the Budget, the Finance Minister tells the country about government’s revenues and expenditures, besides showing how the government plans to use public resources to meet policy goals.

Anywhere in the world, the annual budgetary exercise is important for the government to maintain fiscal discipline. The Budget has to be passed by the Parliament before it can come into effect on April 1, the start of India's financial year.

On the Budget day, the Finance Minister tables a bunch of documents on the floor of the Parliament. To cope up with these documents and terminologies, it is very important to understand the basics standards of these words.

As the government prepares to present the Union Budget, slated for February 1, here we take a look at terminologies that will help the readers to understand the Budget file of the Finance Minister.

Besides the Budget speech, following documents are presented by the Finance Minister on the floor of the House:

Annual Financial Statement (AFS)

Under the Article 112 of the Constitution, the Government of India requires to present a statement of estimated receipts and expenditure in respect of every financial year in the Parliament. The receipts and disbursements are shown under three parts in which government accounts are kept. It also distinguishes the expenditure on revenue account from the expenditure on other accounts. This document is called the Annual Financial Statement.

Demands for Grants (DG)

Demand for Grants is a kind of form that is submitted in pursuance of Article 113 of the Constitution. The form carries estimates of expenditure from the Consolidated Fund, included in the AFS. It also requires a vote by the Lok Sabha. Generally, one Demand for Grant is presented in respect of each Ministry or Department. However, more than one Demand may be presented for a Ministry or Department depending on the nature of expenditure.

Appropriation Bill

It is a document that empowers the government to withdraw funds from the Consolidated Fund for meeting its yearly expenses. The passage of the Bill in the Lok Sabha is necessary. Under Article 114(3) of the Constitution, no amount can be withdrawn from the Consolidated Fund without the enactment of such a law by the Parliament. In most democracies, approval of the legislature is mandatory for the government to spend money.

Finance Bill

Finance Bill is presented at the time of presentation of the AFS in fulfilment of the requirement of Article 110 (1)(a) of the Constitution. The Bill details the imposition, abolition, remission, alteration or regulation of taxes proposed in the Budget.

Memorandum Explaining the Provisions in the Finance Bill

It deals with information to facilitate understanding of the taxation proposals in the Finance Bill. The provisions and their implications are also explained in this.

Macro-Economic Framework Statement

It is a statement presented under Section 3(5) of the Fiscal Responsibility and Budget Management Act, 2003. It comprises an assessment of the overall growth prospects of the economy with specific underlying assumptions. It emphasises the expected GDP growth rate, fiscal balance of the government and the external sector balance of the economy.

Fiscal Policy Strategy Statement

To comply with the rules under Section 3(4) of the Fiscal Responsibility and Budget Management Act, 2003, the government must present a statement in the Parliament outlining its strategic priorities relating to taxation, expenditure, lending and investments, administered pricing, borrowings and guarantees. It explains how the current policies are in conformity with sound fiscal management principles and gives the rationale for any major deviation in key fiscal measures.

Medium Term Fiscal Policy Statement (MTFP)

It is a statement that is presented in the Parliament under Section 3(2) of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003. The document sets out three-year rolling targets for five specific fiscal indicators in relation to GDP at market prices. They are: revenue deficit, effective revenue deficit, fiscal deficit, Tax to GDP ratio and total outstanding debt as percentage of GDP at the end of the year.

It includes the underlying assumptions, an assessment of sustainability relating to balance between revenue receipts and revenue expenditure and the use of capital receipts including market borrowings for generation of productive assets.

Medium Term Expenditure Framework Statement

This document, tabled under Section 3 of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, is presented in the Parliament in the Session after the Budget session. It sets forth a three-year rolling target for the expenditure indicators with specification of underlying assumptions and risks involved. The statement provides an estimate of expenditure commitments for various items -- education, health, rural development, energy, subsidies and pension etc.

The objective is to provide a closer integration between budget and the FRBM Statements. This Statement is normally presented in the Monsoon Session of Parliament.

Expenditure Profile

Once the Budget is approved, by allocating costs to the activities in a schedule, a profile of expenditure is produced. The three major components are: base cost estimate, contingency and 

Expenditure Budget

It shows the revenue and capital disbursements of various Ministries and Departments and presents the estimates in respect of each under 'Plan' and 'Non-Plan'.

This document gives a detailed analysis of various types of expenditure and broad reasons for the variations in estimates. Demand for Grants of the government is also its part.

Receipts Budget

This provides an analysis of estimates of receipts included in the AFS. Besides, it gives details of tax and non-tax revenue receipts and capital receipts and explains the estimates. It also provides the arrears of tax revenues and non-tax revenues.

Budget at a Glance

It is a document that shows in brief, receipts and disbursements along with broad details of tax revenues and other receipts. This document also exhibits broad break-up of expenditure - Plan and Non-Plan, allocation of Plan outlays by sectors as well as by Ministries or Departments and details of resources transferred by the Centre to states and UTs.

It also shows the revenue deficit, the gross primary deficit and the gross fiscal deficit of the government.

Highlights of Budget

Outcome Budget

It is a budgeting technique that entails Ministries preparing their budget and submitting it to the Ministry of Finance before the Annual Budget is presented. Basically, it is a practice of suggesting and listing of estimated outcomes of each programmes or schemes designed.

BUDGET GLOSSARY

Aggregate economic data

Total expenditures and total production of goods and services related to the entire economy. For example, aggregate demand is the total spending on consumption, investment, government purchases, and net exports, while aggregate supply is the total amount of good and services produced in the economy.

Balanced budget

Budgets in which revenues are equal to expenditures are referred to as "balanced budget". It means government.

Highlights of Budget

Outcome Budget

It is a budgeting technique that entails Ministries preparing their budget and submitting it to the Ministry of Finance before the Annual Budget is presented. Basically, it is a practice of suggesting and listing of estimated outcomes of each programmes or schemes designed.

BUDGET GLOSSARY

Aggregate economic data

Total expenditures and total production of goods and services related to the entire economy. For example, aggregate demand is the total spending on consumption, investment, government purchases, and net exports, while aggregate supply is the total amount of good and services produced in the economy.

Balanced budget

Budgets in which revenues are equal to expenditures are referred to as "balanced budget". It means there is neither a budget deficit nor a budget surplus.

Budget cycle

It consists of the major events or stages in making decisions about the budget, and implementing and assessing those decisions. The budget cycle usually has four stages: budget formulation, enactment, execution, and auditing and assessment