This note provides brief guide on how the budget papers are organised, and how to find the exact information that a reader wants (expenditure on a particular scheme of interest, or total budget allocation of a ministry, for instance). For note on the Budget process, click here.
The Finance Minister presents an annual statement to Parliament of how much money the central government expects to raise in the next financial year and how it plans to spend that money. The documents also contain information on how much money was budgeted for various schemes or ministries in the past year, and an estimate of how much it is likely to spend by the end of the current financial year. These statements, taken together, are called the union budget. There are a number of separate documents which comprise the budget papers. They can seem confusing and technical, and the same information can often be found in different documents.
The Budget papers are accompanied with a ‘Key to the Budget Documents’ (leaf green in colour) which gives much more detailed information on the budget papers.
This note is organised as follows:
Part II – What do certain terms (“plan expenditure”, “revenue expenditure” etc) found across the budget documents, mean?
Part III – Which document contains the information I need?
Part I – How are the budget documents organised?
While there are as many as fourteen separate documents (coloured differently!), they can be classified into just four broad categories (see Table 1). Within each category, there are both colour-coded and plain documents. The plain documents are required to be presented to Parliament (and in some cases, voted on) under the provisions of the Constitution or under the FRBM Act. The colour-coded documents are explanatory in nature and are intended to present budget information in more convenient ways. Finally, almost all information in all documents is presented in a comparative format, with amounts budgeted for the next financial year, for each category or type of expenditure, shown along with the expenditure budgeted for the previous year and the amount actually expected to spent. This helps readers understand how the governments expenditure (or taxation priorities) are changing over time.
Part II – Explanation of some terms used in the Budget Papers What are ‘Budget Estimates’, ‘Revised Estimates’ and ‘Actuals’?
The ‘Budget Estimate’ for any ministry or scheme is the amount allocated to it in the budget papers for the following year. For instance, in the budget speech in February, the finance minister will present ‘budget estimates’ for expenditures under various ‘heads’ for the 2010-11 financial year which runs from April 2010 to March 2011. Once the financial year gets underway, some ministries may need more funds than was actually allocated to them under the ‘budget estimates’. The government approaches parliament with such ‘supplementary’ requests for funds during the course of the financial year (in the monsoon or winter session). These supplementary demands, are reflected in the ‘revised estimates’ for the current year. Thus along with budget estimates for 2010-11, the finance minister presents the revised estimates for 2009-10.‘Actual’ expenditures are the final amounts spent under different heads and may exceed (or fall short of) the Revised Estimates. Since the actual expenditure can only be assessed once the financial year is over and final accounts have been prepared, the Actual expenditures presented in the budget papers are for the earlier financial year i.e. for the year 2008-09.
How is government expenditure classified in the budget?
There are two different sets of classifications used – Plan vs Non-plan and Capital vs Revenue expenditure:
Capital Expenditure: expenditure used to create assets or to reduce liabilities e.g. building a road, or paying back a loan.
Revenue Expenditure: expenditure not used to create assets e.g. expenses on salaries or other administrative costs.
Plan Expenditure: expenditure on schemes and projects covered by the five-year Plans. Such plans are developed by the Planning Commission after consulting individual ministries. Each Plan specifies programmes that ministries will fund and develop over the next five years (such as the Mid-day Meal scheme and the Sarva Shiksha Abhiyan). The current Plan is the eleventh, and runs from 2007 to 2012. Plan expenditure can have both revenue and capital components. For instance, under the Sarva Shiksha Abhiyan, salaries of teachers could be classified as revenue expenditure, while expenditure on the building a school might be classified as capital expenditure.
Non-plan expenditure: Ongoing expenditure by the government not covered by the Plans. These include interest payments on government debt, expenditure on organs of the state such as the judiciary and the police and even expenditure on the maintenance of existing government establishments such as schools and hospitals.
Non-plan expenditure too, has revenue and capital components.
The distinction between plan and non-plan expenditure in the budget can be confusing since it depends on the schemes announced under the current five year plan. So for instance, PMGSY may be a plan scheme as of now, but after 2012, it may be classified as a non-plan scheme if it is not a scheme covered by the twelfth plan(2012-2017).
How are government receipts classified?
Capital Receipts: Receipts which lead to a decrease in assets or increase in liabilities of the government. These are mainly funds borrowed by the government from various sources, both in India and from overseas, and repayments by state governments of loans from the centre. Any proceeds from the disinvestment of public sector companies also come under this category.
Revenue Receipts: Receipts which do not have a direct impact on the assets or liabilities of the government. Mostly revenues from taxes, dividends from companies owned by the government, user charges on some public services and licence fees received from licensees such as telecom companies.
What is the fiscal deficit?
What is the difference between ‘charged’ and ‘voted’ expenditure?
Part III – How can I find the information I need? Through the aid of a few examples, we show how the budget documents can be used to find the information you want. All budget documents are found on indiabudget.nic.in.How can we find information on funds allocated to a given scheme?Use Expenditure Budget Vol II(http://indiabudget.nic.in/ub2009-10/eb/vol2.htm)
Go to the page for the Ministry for Human Resource Development (Department of School Education and Literacy). You should see a table which looks like the one below. As you will see, for each scheme or ‘head’, data is given on the budgeted amounts and the revised amount for the current year (2008-09), and the budgeted amount for the next year (2009-10). We focus on the budgeted amount for 2009-10 (the last column). Further, for each column, data is given for amounts under ‘plan’ and ‘non-plan’. We only focus on the totals.Item 7 gives details for allocations of funds to the SSA from the general budget revenues only (this is not the only amount to be spent on the SSA as we will see in a moment). The last row of numbers under Item 7 gives the total allocation for SSA from general budget revenues and it is that total we focus on. This is Rs 4239.25 crore.Funds for the SSA also come from the ‘education cess’ – a dedicated tax imposed on all taxpayers specifically to fund expenditure on education. Revenues from this tax go to the ‘Prarambhik Shiksha Kosh’. The total amount spent on the SSA for 2009-10 therefore is Rs 11,933.92 crore (4,239.25 crore + Rs 7,694.67 crore). Finally, there is a glossary of the various schemes towards the end of the ‘expenditure Budget’ document. A similar document is prepared for each ministry. To know the allocations for the National Rural Employment Guarantee scheme for instance, we would look at the same document for the Department of Rural Development, Ministry for Rural Development. For most schemes, the total allocation is usually given by a single number, rather than two (as for SSA).
The first few pages of Expenditure Budget Vol II summarises the total expenditure of various departments and ministries. For instance, the total allocation to the Department of Agriculture and Cooperation is Rs 11,915.22 crore.
It’s important to mention here that the allocations for ministries summarised at the beginning of the ‘Demands for Grants’ document may seem different from that found in the two volumes of the Expenditure Budget. Why is this?
The data in the Expenditure Budget reflects the expenditure of a ministry for the following year after accounting for ‘recoveries’ e.g. revenues the ministry may have from charging of user fees for public services. The summary at the beginning of the ‘Demands for Grants’ does not make this adjustment. However, in the detailed data for each ministry, such an adjustment is shown along with the original number. So the two sets of data are not really different. They are just presented in different ways.
How do we find information on funds allocated under various schemes for scheduled castes/tribes or for women or children?
There are various schemes in budget, spread across a number of ministries which may allocate funds to minorities or to women. Some schemes may be specifically targeted at these groups while others may require that a certain part of the benefits of the scheme be given to such groups. There are three statements in the Expenditure Budget Vol I (Statements 20, 21, 22) which summarise this data in one place. Statement 20 gives data on Gender Budgeting, Statement 21 gives data on schemes for Development of Scheduled Castes and Scheduled Tribes, while Statement 22 gives data on budget provisions for Schemes for the Welfare of Children. Keep in mind that these are all plan expenditures.The last line in each statement gives the total funds allocated for these groups. Using this data we find that the total amount of plan funds allocated across schemes for 2009-10, for the welfare of women was Rs 56,857.61 crore, that for SCs and STs was Rs 27,617.79 crore, and that for child welfare was Rs 39,647.18 crore.
The government subsidises the price of diesel and petrol, as well as fertiliser sold to farmers. Estimating the amount spent on these subsidies is complicated by the fact that the complete allocation for such subsidies is not made out of the general budget. A part of this subsidy is given in the form of bonds issued to fertiliser and oil companies which mature in future years. A true picture of the total obligation of the government in this respect, must take into account such bonds.We begin by looking at the allocation made for these subsidies from the budget itself. Data on these subsidies, and others, is found in Statement 4 of Vol. I of the Expenditure Budget (see facing page). From the data, the total revised estimate of the fertiliser subsidy, paid out of the general budget, in 2008-09 was Rs 75,848.75 crore. The total petroleum subsidy, paid out of general budget revenues, was just Rs 2876.43 crore. How does this picture change when we add in the subsidies provided through the issue of government bonds to petroleum and fertiliser companies? The data on such bonds is found later on, in the same document, in Annexure 2.
Which are the taxes that yield the most revenue to the government?Use Receipts Budget, (http://indiabudget.nic.in/ub2009-10/rec.htm)Annexure 7 of the document provides a picture of how the taxes raised by the government have changed over a number of years.
Where in the Budget Papers do I find the total expenditure, total revenues, fiscal deficit and other ‘big’ numbers? Use Budget at a Glance,(http://indiabudget.nic.in/ub2009-10/bag/bag1.htm)
The table on the very first page of ‘Budget at a Glance’ summarises the entire budget in one table.
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