Union Budget & Fiscal Deficit
Economy Advanced · केंद्रीय बजट और राजकोषीय घाटा · 18 facts
Union Budget is presented in the Lok Sabha on February 1 every year (since 2017; earlier it was the last day of February).
Finance Minister presents the Union Budget in Lok Sabha; it must be passed by both Houses of Parliament.
Consolidated Fund of India (Article 266): All government revenues, loans raised, and loan repayments received; all expenditure from here requires Parliamentary approval.
Contingency Fund of India (Article 267): Rs 500 crore; under President's disposal for unforeseen expenditure; Parliament must regularize spending.
Public Account (Article 266(2)): Funds like provident fund, small savings, deposits; not subject to Parliamentary vote for withdrawal.
Fiscal Deficit = Total Expenditure - Total Receipts (excluding borrowings); measures government's borrowing requirement.
FRBM Act 2003 (Fiscal Responsibility and Budget Management): Mandates 3% of GDP as fiscal deficit target; aims to reduce government borrowing.
Revenue Deficit = Revenue Expenditure - Revenue Receipts; indicates government's inability to meet operational expenses from current income.
Primary Deficit = Fiscal Deficit - Interest Payments; indicates fiscal deficit if there were no interest obligations.
Capital Deficit: When capital expenditure exceeds capital receipts; leads to debt accumulation.
Halwa Ceremony: Traditional ceremony conducted before the Budget lock-in period; Finance Ministry officials and their families get halwa (sweet dish).
Economic Survey: Presented a day before the Union Budget; reviews India's economic performance; prepared by Chief Economic Adviser (CEA).
Vote on Account: Interim provision to allow government spending before full budget is passed; usually during election years.
Budget has two parts: Revenue Budget (receipts and expenditure of revenue nature) and Capital Budget (receipts and payments of capital nature).
Direct Tax vs Indirect Tax: Direct (income tax, corporate tax — taxpayer bears burden); Indirect (GST, customs — passed on to consumer).
Disinvestment: Government selling its stake in public sector undertakings (PSUs); budgeted every year as part of capital receipts.
Finance Commission (Art 280): Constitutional body set up every 5 years; recommends devolution of taxes between Centre and States; 15th FC (2021-26).
Zero Based Budgeting: Every budget item must be justified from scratch each year regardless of previous spending; India has adopted it for certain departments.