formulation of india's union budget

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Formulation of Budget in India

Presented By:

Deepa NayakIndicus Analytics Pvt. Ltd.

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Origin

Derived from French word ‘Bougette’ meaning “Sack or Pouch”.

Bag used by the British chancellor to keep his papers to be presented to the parliament.

Present sense of the term was used for the first time in 1873.

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History of Budget - India

First Budget presented in 26th November 1947 by finance minister Sir R K Shanmugam Chetty.

Plural Budget – Railway and General Budget

1921- Separation of Railway budget from General Budget on the recommendation of Acworth Committee.

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Budget Types

I. Line item or traditional or incremental Budgeting :

Budget in terms of object-wise (line item) classification.

II. Performance Budgeting : Emphasizes purpose of expenditure

rather than the items of expenditure.

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Budget Types …contd..

III. Programme Budgeting (PPBS): Selecting the best out of a number of available programmes.IV. Zero Based Budgeting (ZBB): Opposite of incremental budgeting. Departmental demands are

reviewed comprehensively and all expenditure are approved.

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Outcome Budget

"Outlays do not necessarily mean outcomes.

The people of the country are concerned with outcomes….“ P Chidambaram

Introduced in Budget 2005-06 to measure the development outcomes of all major programmes.

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Formulation of Budget

Main Players

Ministry of FinanceAdministrative Ministries

Planning Commission

Comptroller & Auditor General

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Stages of Formulation

Stage I Preparation of Estimates – Sending Circulars by Finance ministry to different ministeries.

Particulars of the Form Actual figures of the previous year Sanctioned Budget estimates for current year Proposed estimates for next year Actual figures of current year Actual figures for the corresponding period of

previous year.

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Stages of Formulation…Contd.

Stage II Scrutiny & Consolidation of estimates by

Deptts. & Ministeries

Stage III Scrutiny by Finance Ministry Settlement of disputes

Stage IV Consolidation by the Finance Ministry Preparation of estimates of revenue

Stage V Approval of the cabinet

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Enactment of Budget - Stages

I. Presentation of Budget – Rule 213

II. General Discussion – 3 to 4 days

III. Voting on Demands for Grants

IV. Passing of Appropriation Bill

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Execution of Budget Implementation of the Budget after

enactment by Parliament

Executed by various ministeries/departments under control of Finance Ministry

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formulation of india's union budget

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