The word ‘budget’ can be looked at from two perspectives.
As a noun, a budget defines what your spending limits are and spells out exactly what you can spend your money on. The phrase “I’m on a budget” is an oft-repeated, much dreaded state of being.
As a verb, ‘budget’ or ‘to budget’ is the process of defining how you will manage your money and to what specific areas you plan to allocate your resources over the course of a definite period of time.
The Union Budget
But these definitions are for simple folk like you and me. In the context of the Indian government, the Union Budget is the master plan that guides all Central Government spending for a given financial year. Besides defining the expenditures and how they will be made, the Union Budget also defines the targeted amounts and sources of revenue that the government expects to generate between 1st April and 31st March of each year.
When is it presented
The Union Budget is typically presented before the Parliament by the incumbent Finance Minister on the last working day of February, each year. It is then debated upon by the Lower House till a consensus is arrived at, changes are made to the original draft and the final version of the annual Union Budget goes into effect on 1st April of each year. In an election year, the incumbent government presents an interim budget in the Parliament. After the election results are announced, the new government presents the final budget for that year. This year it will be presented on 10 July 2014.
What it includes
Now that we have established that the budget deals with income and expenditure of the government in a given financial year, let’s understand the individual components that are part of these revenues and expenses.
The Union Budget is divided into 2 parts:
a) The Revenue Budget
b) The Capital Budget
a) The Revenue Budget
The revenue budget deals with the income and expenditure related to the day to day operations of the country.
Income is generated from direct and indirect taxes, interest and dividend earned on government investments and fees received for services rendered by the government.
Expenditure under the revenue budget is made on keeping the wheels of the government turning on a day to day basis – salaries for government employees, offering services to citizens, subsidies and grants paid out to states and other entities and making interest payments on borrowings made by the government.
b) Capital Budget
The Capital Budget deals with income and expenditure that have a longer maturity window.
Income under the capital budget includes loans raised by the government from the open market, the RBI and foreign governments. Income earned by repayment of loans by State Governments to the Central Government also qualifies as a capital income.
Expenses on developing assets like infrastructure, healthcare, education, land and others come under the capital budget. It also includes investments made by the Government in shares, loans given out to the States, public sector companies, foreign governments and so on.
As a noun, a budget defines what your spending limits are and spells out exactly what you can spend your money on. The phrase “I’m on a budget” is an oft-repeated, much dreaded state of being.
As a verb, ‘budget’ or ‘to budget’ is the process of defining how you will manage your money and to what specific areas you plan to allocate your resources over the course of a definite period of time.
The Union Budget
But these definitions are for simple folk like you and me. In the context of the Indian government, the Union Budget is the master plan that guides all Central Government spending for a given financial year. Besides defining the expenditures and how they will be made, the Union Budget also defines the targeted amounts and sources of revenue that the government expects to generate between 1st April and 31st March of each year.
When is it presented
The Union Budget is typically presented before the Parliament by the incumbent Finance Minister on the last working day of February, each year. It is then debated upon by the Lower House till a consensus is arrived at, changes are made to the original draft and the final version of the annual Union Budget goes into effect on 1st April of each year. In an election year, the incumbent government presents an interim budget in the Parliament. After the election results are announced, the new government presents the final budget for that year. This year it will be presented on 10 July 2014.
What it includes
Now that we have established that the budget deals with income and expenditure of the government in a given financial year, let’s understand the individual components that are part of these revenues and expenses.
The Union Budget is divided into 2 parts:
a) The Revenue Budget
b) The Capital Budget
a) The Revenue Budget
The revenue budget deals with the income and expenditure related to the day to day operations of the country.
Income is generated from direct and indirect taxes, interest and dividend earned on government investments and fees received for services rendered by the government.
Expenditure under the revenue budget is made on keeping the wheels of the government turning on a day to day basis – salaries for government employees, offering services to citizens, subsidies and grants paid out to states and other entities and making interest payments on borrowings made by the government.
b) Capital Budget
The Capital Budget deals with income and expenditure that have a longer maturity window.
Income under the capital budget includes loans raised by the government from the open market, the RBI and foreign governments. Income earned by repayment of loans by State Governments to the Central Government also qualifies as a capital income.
Expenses on developing assets like infrastructure, healthcare, education, land and others come under the capital budget. It also includes investments made by the Government in shares, loans given out to the States, public sector companies, foreign governments and so on.