mrunal interim budget 2014_ tax vs non-tax income & expenditure

7/8/2014 Mrunal Interim Budget 2014: Tax vs Non-Tax income & Expenditure

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[Budget] Interim Budget 2014 : Revenue Part: Non-Tax Receipts,Expenditure,Effective Revenue Deficit, Loans, Interest, Dividendclassification explained

1. Prologue

2. Raju Guide (DevAnand)’s budget

1. Revenue incoming

2. Non Tax Revenue

3. Revenue Outgoing

4. Raju Guide’s Capital Budget

5. Capital incoming (receipt)

6. Capital Outgoing (Expenditure)

3. Govt.’s Annual financial statement

1. Non-Tax Revenue receipts of Government

2. [Table] NON-TAX REVENUE sources (Descending order)

3. Revenue Expenditure

4. [Table] REVENUE Expenditure (Descending order)

5. Revenue deficit

4. How did chindu manage to reduce the revenue deficit?

1. #1: increase in the non-tax income

2. #2: decrease in Revenue expenditure

3. Why Percentages did not change?

4. Revenue Deficit 3% in 2014-15, is it possible?

5. Effective Revenue deficit

Prologue

In the first article of interim budget 2014, we learned about tax vs non tax Revenue.(click me).

Anyways, that wasn’t really tough- even high school kid can understand direct vs indirecttax. Now comes the bit more complicated parts-

1. classification of non-tax revenue vs capital receipts2. classification of revenue expenditure vs capital expenditure3. Internal classification of above parts.

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Click to Enlarge

So, before we dwell into them, let’s take a technically incorrect example/ ”case-study”involving

Raju Guide (DevAnand)’s budget

DevAnand is a tourist guide. He can keep track of his business, like a normal middleclass professional: income vs expenditure. But he decides to maintain accounts like thegovernment.

Raju Guide’s Annual financial statement

Revenue part Capital part

incomingoutgoing incoming outgoing

Tax non-tax

Devanand is neither CA nor MBA(Finance). Nor he can afford to hire thoseprofessionals. Therefore, to keep things simple, Dev follows three jugaad principles toclassify all the incoming and outgoing money:

1. Short-term (upto 1 year)= left side (Revenue part)

http://www.flickr.com/photos/97816112@N02/12682834644/



2. long term (beyond 1 year)= right side (Capital part)3. Non-productive stuff= left side (revenue part)

Now let’s start

Revenue incoming

Whatever money Dev earns within a year (and its recurring in nature- meaning next yearalso, he’ll earn from the same sources). We can see this Ganga, gets water from twosmaller tributaries:

1. Tax revenue: but since DevAnand is neither a Government nor a Goonda, hecannot extract tax. Therefore, all his short term incoming money is from thesecond stream, which is….

2. “non-tax revenue”

Non Tax Revenue

This river gets money from various smaller streams:

#1: Income from direct sale of goods/services

DevAnand works as a tourist guide- he gets fees for ‘services’DevAnand also own a bookstore near the railway station. He also earns money byselling “goods”= books, magazines, souvenirs and (mostly) Rozgaar Samachaar.

^since he gets this money every year(=short term), and it is in recurring nature (becausehe’ll earn it every year)=> therefore, we’ll write this on left hand side of table (Revenuepart).


incoming outgoing incoming outgoing

Tax non-tax

NONE 1. direct sale of goods/services

#2: Income from Khairaat (Grant/charity/donation)

Once in a while, Dev also receives funding from UNESCO, Archeological survey,culture ministry and foreign NGOs.These are grants/aid = Not “loans” = Dev doesn’t need to repay them in 10-20years. So we cannot put them under Capital part (right side of the table).Therefore, we’ll put them on left hand side of table (Revenue)





Tax non-tax

NONE1. direct sale of goods/services2. Grants, aid, charity, donation

#3: income from investment

So far, Dev made money from selling goods/services, he also got somegrants/charity/donations.he will invest some of this money into:

Investment in What will Dev earn?

1. Shares of LIC, ONGC etc dividend

2. Bank savings account / fixed deposit Interest

3. in his own bookstore @railway station Profit

Since he’ll earn these (dividend, interest, profit) on yearly basis = short term = revenueside (left hand side of the table). now let’s update


Revenue part (short-term) Capital part


Tax non-tax

NONE1. Selling goods/services2. dividend, profit, interest3. grant, aid, donation

Government’s annual financial statement also follows similar pattern, we’ll see thatafter a few paragraphs. But for the moment, let’s continue with DevAnand’s case study.

Revenue Outgoing (Expenditure)

here, we focus on the short term expenditure (occurring on daily, monthly or yearlybasis)



#1: Input cost: Money spent to earn money

We learned DevAnand earns money (non-tax revenue receipt) by selling goods(books,souvenirs) and services (as a tourist guide). but for that also, Dev has to incur someexpenditure, such as:

1. “input cost/raw material”: buying books, magazines, souvenirs from thedistributors.

2. Office establishment: on lightbill, phonebill etc.3. On employees: salary, Provided fund contribution. Hiring some poor

kids/teenagers to lure tourists to him.4. Commission paid to coolies and taxi drivers- so they recommend tourists to hire

Dev as their guide.5. Advertisements in newspapers, posters around railway station, even on facebook!

These are all “Short-term” Expenditures- re-occurring on daily/monthly/yearly basis.Therefore we put’em under Revenue Expenditure (and not under capital Expenditure.)

#2: Interest paid

Dev had taken bank loans to purchase railway station bookstore, tourist bus/mini-van and other big “capital” assets/goods. say Rs.10 crores @10% interest rate for10 years.A loan involves = Principal (10 crores) + Interest (10% annual).The loan principle (10 crore) = Dev will have to pay it after 10-20 years=longterm= goes on right side (capital part).BUT on such loans, Dev will have to pay interest every year= short termrecurring=Revenue part. (Left side).



Tax non-tax

NONE

1. Sellinggoods/services

2. dividend,interest, profit

3. grant, aid,donation(received)

1. Input cost: moneyspent to earn money

2. Loan Interest paid

1. loantaken

#3: Khairaat given (grants/aid/charity)

Previously, we saw that if UNESCO, ASI, Foreign NGO gives khairaat toDevAnad (incoming money)=> we put under (non-tax) Revenue receipt.



so on the same logic IF DevAnand gives khairaat to someone (outgoingmoney)=>then we must put it under revenue Expenditure.Unlike LOANs, the grant/aid/charity cannot recovered after 10-20 years=>therefore its short term Expenditure and as per Dev’s Jugaad principle everythingshort term goes on left hand side. (Revenue part)

let’s update our table


incoming (receipt) outgoing (Expenditure) incoming outgoing

Tax non-tax

NONE

1. by Sellinggoods/services

2. Dividend,interest, profit

3. Khairaatreceived


2. Interest paid (onborrowed money)

3. Khairaat given

this pretty much sums up the Revenue part.

Revenue deficit

= difference between the incoming and outgoing money in revenue part.

=Revenue Expenditure MINUS Revenue receipt.

Raju Guide’s Capital Budget

We’re done with left hand side of the table (Revenue part), now time for the right handpart (capital)

Capital incoming (receipt)

As per DevAnand’s jugaad principle for “finance and accounting”:

short term = revenuelong term = capital

Accordingly, two streams from where, Capital money comes:

#1: Debt

all the loans taken by Dev.since loan principal is repaid in long term (10-20) years=> falls under capital part



although loan is “Borrowed” money, but since for the time being it is“incoming”=> therefore, we’ll put all the loan borrowed under Capital receiptloan can be from two sources: within India (internal) and from outside (External)


incoming (receipt)outgoing (Expenditure) incoming outgoing

Tax non-tax

NONE



3. Khairaatreceived


2. Interest paid (onborrowed money)

3. Khairaat given

#Debt

1. internal2. external

#Non-Debt

Capital incoming #2: Non-Debt

a: principal recovered:

DevAnand himself had given loans to Prem Chopra in past.Pran kept paying interest (and we’ll put it under “non-tax” revenue of Dev)but when Prem returns the original principal => that’s money recovered in longterm=> falls under capital incoming.

b: Disinvestment

Dev had invested in shares of LIC, ONGC etc. 30-40 years. Now he wants to sellthem for quick return => this is also money recovered in long term (because hisoriginal investment made years ago)So, money earned by selling such shares= that is also capital receipt.


incoming (receipt)outgoing(Expenditure)

incoming outgoing

Tax non-tax

NONE



3. Khairaatreceived

1. Input cost:money spentto earn money

2. Interest paid(on borrowedmoney)

3. Khairaat

#Debt


#Non-Debt

1. loan(principal)



given recovered2. Disinvestment

Capital Outgoing (Expenditure)

two main sewers where money goes:

#1: loan (principal) given

revenue part capital part

loan interest (given/received) loan principle (given/received)

Suppose Dev gives Rs.1 crore as loan to Prem Chopra @10% interest, for 10




year.The principal (Rs.1 crore) will be put under Capital Expenditure (because givenout for long term.)The interest rate earned (10% per year) will be counted as “non-tax” revenue inevery years’ account. (Because its short term- re-occurring).of course in real life, the EMI involves recovery of both principal + interestrate=> so whatever portion comes as interest=> under non-tax Revenue incomingand whatever principal is recovered => under capital incoming.

In other words

revenue part capital part

receipt(incoming)

Expenditure(outgoing)

receipt (incoming)Expenditure(outgoing)



http://mrunal.org/2014/02/budget-interim-budget-2014-revenue-part-non-tax-receipts-expenditureeffective-revenue-deficit-loans-interest-dividend-explained.ht… 10/26

interestreceived

interestpaid

Debt:

you borrowed Loan fromsomeone

Non-Debt:

loan principle recovered(from the loans you had givento someone)

You loaned(Principle) tosomeone.

#2: Purchase of capital assets/ capital goods.

Example

buying new tourist bus, mini-van, taxibuying a hotel/restaurant for the tourists to stay

How is the different from the “input cost on raw material”? (buying sugar/milk/teapowder)

raw material will vanish / exhaust after product is made (blank paper=>magazine=>sold)Capital asset/goods will stay with the entrepreneur, even after product is made(blank paper =>printing press=>magazine.)Capital asset depreciates (wears out with time). Entrepreneur gets tax benefit forthis depreciation. He will not get depreciation benefit on raw material (blankpaper, milk, sugar, tea etc.)

Anyways, let’s make final table



incoming (receipt) outgoing(Expenditure)

incoming outgoingTax non-tax

NONE



3. Khairaatreceived

1. Inputcost:moneyspent toearnmoney

2. Interestpaid (onborrowed

#Debt (borrowedMoney/loans taken)


#Non-Debt

1. loan

1. Loan(principal)given.

2. money spenton capitalgoods/assets



money)3. Khairaat

given

(principal)recovered

2. Disinvestment

— THE END – of DevAnand’ case study. now let’s focus on government’s annualfinancial statement

Govt.’s Annual financial statement


incoming (receipt)outgoing (Expenditure) incoming outgoing

Tax non-tax

1. Direct (DONE)*2. indirect (DONE)*

*we’ve already covered them in previous article. click me

Non-Tax Revenue receipts of Government

http://mrunal.org/2014/02/budget-interim-budget-2014-part-1of4-revenue-reciepts-direct-taxes-indirect-taxes-gross-vs-net-taxes-shortfalls-collection.html



#1: by providing goods and services

List is not-exhaustive, but here are some examples:

All the money earned by Postal department.Police income: E.g. CISF giving security to Infosys, airport etc. They have to pay




service fees to CISF.UPSC, SSC: their exam fees, RTI feesDefense

Money earned from government canteenswhen DRDO sells some technology/patent/product to other PSU or foreigngovernment

Sci-Tech/healthcareWhen AIIMs charges money for X-ray and various tests. (Althoughgovernment gives subsidy on them but still for accounting purpose we’ve tocount the money paid by junta as “incoming non-tax revenue”.when ISRO sells patent/technology/services to state governments, privatecompanies, foreign governments/space agencies

Income By Ministries, exampleSpectrum Auction => Ministry of Ministry of communication &Information Technology.India Yearbook 2014, Yojana Magazine etc. =>Ministry of Information andbroadcasting.

In Dev’s case, we listed such (non-tax) income as “selling goods/services”. butgovernment feels “shy” about admitting that they “sell” goods/services. Therefore, inGovernment’s annual financial statement, all such income is listed as “Other receipts”or “Other sources”. Anyways, let’s update the table




1. Direct(DONE)

2. indirect(DONE)

1. Other sources (sellinggoods & services)

#2: by investment

Government has shareholding in LIC, Coal India, SAIL, SBI ….so theseorganization have to pay “Dividend” to Government (and all other shareholders).[Important: if they sell such shares- that’ll be disinvestment and fall under capitalreceipt part].If Government had given loan to any PSU, State/UT/Foreign government=>they’ve to pay loan interest. All such loan “interest” counted here.

#3: Khairaat (Grant /charity / aid)

received from World bank, foreign countries, private individuals etc. counted here

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#4: UT without legislature

in the previous article, we saw that direct/indirect taxes collected by Diu Daman,Andaman Nicobar etc UT (without legislature) => they are counted under Union’s(gross) tax revenue.

On the same logic, All the non-tax revenue collected by such UT w/o Legislature= also counted under Union.

overall,




1. Direct2. indirect

1. Other sources2. dividend3. interest

(received)4. External Grant5. from UT w/o LSR

For the MCQs, we need to know which source brings maximum non-tax revenue.

[Table] NON-TAX REVENUE sources (Descending order)

Non Tax (Cr.) BE 2013 RE 2013 BE 2014

1. Other receipts 78000 79788 80240

2. Dividend and Profits 73866 88188 77229

3. Interest receipts 17764 21018 19729

4. External Grants 1456 3135 2405

5. UT w/o LSR 1166 1097 1111

Total Non-Tax Revenue 172252 193226 180714

BE 2013 not really important because we’ve the “revised” estimates of 2013.for RE2013 (1/4/2013 to 31/3/2014): bigger to smaller is: Dividend>>others

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(selling goods / services)>>interest>>external grant>>UT.Why? because Chindu had ordered the PSUs to declare big dividends (So he couldfillup the Revenue deficit…more given at the end of this article.)

for BE2014 (that is 2014-15), he doesn’t plan to fetch large dividend from PSU (if heextracts large dividends from PSUs every year, they’ll be left with no money forbusiness-expansion.) Anyways for

BE2014: Bigger to smaller is ….

Others (ie. by selling goods/services) >> dividend >> Interest >>Grant >>UT

so far, we are done with budget => revenue part=> incoming.

Now, it’s the time for

Revenue Expenditure




Overall, we can summarize it under

1. interest paid on the loans borrowed2. Subsidies (because they are short term/non-productive, hence under Revenue

outgoing.)




3. money paid to produce those goods/services=> salary-pension-light billtelephone bill (including defense, CRPF etc.)

4. Khairaat (grants) given to States/UT/Foreign countries

But in the annual financial statement, they put these things in a more refine manner.Let’s observe:

[Table] REVENUE Expenditure (Descending order)

Revenue Expenditure (Crores)BE2013

RE2013

BE2014

Interest PAID 370684 380066 427011

Subsidies 231084 255516 255708

Defence Services 116931 124800 134412

Pensions 70726 74076 80983

Grants to State/UT 76981 61617 69436

Police (NIA, CBI, + CRPF, BSF etc central armedpolice forces.)

40895 43148 46427

General Services (President, PM, cabinet Secretariat,judiciary, parliament, Tax collection, external affairs;EC, CAG, UPSC, etc. bodies)

22903 23058 26824

Economic Services (Agro, Industry, power, telecom,S&T etc. ministries and bodies)

24334 25459 26464

Social Services (Edu, Health, Broadcasting etc.ministries and bodies)

23114 25438 24819

Postal Deficit 6717 5880 6908

Money given to States for Disaster/Calamity Fund 4800 4650 5050

revenue Expenditures of UT without LSR 4395 4442 4468

Grants to Foreign governments 4144 4188 4321




Numbers are not important. I’ve already arranged them in descending order. The top fiveare:

1. Interest paid to previous loan2. Subsidies3. Defense4. Pension. (this is important: although pension is paid after 20-30 years of

service BUT pension doesn’t count as “capital Expenditure”, it falls under revenueExpenditure)

5. Grants to State/UT (important: if “loans” were given, we count them underCapital Expenditure but grant=Revenue Expenditure).

Sidenote: if railway budget was not presented separately, then railway Expenditurewould also be counted under this “Revenue Expenditure”. (Just like we’ve done withPostal dept.)

Revenue deficit

This is the difference between outgoing and incoming money in Revenue part.

= Revenue Expenditure MINUS Revenue receipt.

(You can also write it as Revenue receipt minus revenue Expenditure, in that cse you’llget answer in Negatives sign).

REVENUE (Crore Rs.) BE 2013 RE 2013 BE 2014

Expenditure 1436169 1399540 1550054

Receipt 1056331 1029252 1167131

Revenue Deficit (A-B) 379838 370288 382923

Revenue deficit as % of GDP 3.30% 3.30% 3%

What is the MCQ wisdom here?




Observe that in Feb 2013 (original Budget estimate) Chindu feared that revenuedeficit will be ~3.8 lakh crores.But in Feb 2014 (Revised Estimate), the revenue deficit is quite lower: just ~3.7lakh rupees. So the million dollar question is

How did chindu manage to reduce the revenue deficit?

Let’s focus only on the revenue part of budget:

Incoming receiptoutgoing Expenditure

tax non-tax

did not fetch enough money

From the first article, you know that direct-indirect taxes did not bring expected amountof cash. In fact, there was shortfall of ~77k crore rupees because of inflation and policyparalysis.

So obviously, Chindu could have succeed in cutting down the Revenue deficit by onlytwo ways

1. Increase the incoming Revenue (from Non-tax Revenue receipts)2. Decrease the outgoing Revenue (revenue Expenditure).

#1: increase in the non-tax income

1. Spectrum Auction: in Feb 2014. (In theory, it brought >60k crores but telecomcompanies will pay in installments over next ten years. So, for the account year

2013-14 (ending @31st March 2014), this is ~18k crores.

Crores BE 2013 RE 2013 BE 2014

Other receipts 78000 79788 80240

recall that, when government sells goods/services and earns money=> they call it “otherreceipts”. Spectrum auction money also count under other reciepts.

How much did Chindu earn more than expected?

RE2013 MINUS BE2013= ~80k minus ~78k=2k more.

Wait, I just said government fetched ~18k crore through spectrum auction. Then whydoes it show only 2k here?

Because in Feb2013 (when Chindu presented BE2013), he would have madeprojections that 48k crore from auction, but companies would pay installmentsover 10 years so estimated income from spectrum for 2013-14 =~x crore rupees.So, entire amount of 18k crore (first installment from spectrum auction) is not



“surprise” for him. It is just slightly higher than his original estimate.

2. Special dividend: Chindu ordered Coal India to pay high dividend (Rs.29 pershare). Since government is majority shareholder=> Chindu got ~15k crorerupees from Coal India alone. Similarly, other PSUs also paid high level ofdividends => as a result high income from non-tax sources.

Crores BE 2013 RE 2013 BE 2014

Dividend and Profits 73866 88188 77229

Observe that in revised estimate (RE) he got (88k-74k)=~14k crores higher thanexpected.

Wait a minute, I just said 15k from coal India, then why is it only ~14k higher thanexpected? Because in BE2013 also, Chindu would have estimated that 8-10k crore fromcoal India dividend. it’s not like entire 15k crore came as “surprise”.

3. External grants: he received almost 50% more than expected. see the t able

Non Tax (Cr.) BE 2013 RE 2013

External Grants 1456 3135

What about disinvestment? That counts under capital part. So ignore here. We’ll see innext article.

#2: decrease in Revenue expenditure

1. DBT: In 2013: they implemented DBT (Direct benefit transfer) in >25 schemes.= less subsidy leakages. + cost of delivering subsidy also decreased (as a result ofonline banking transfer, less paper work and staff needed).

2. Postponed Oil subsidy payment: For the year 2013-14, Chindu had to paytruckload of cash to Indian Oil, BPCL and HPCL. But out of that, he had

postponed the payment of ~35k crore rupees to after 31st March 2014. (meaningit’ll not reflect in the accounts for 2013-14)= Revenue Expenditure automaticallydown for 2013-14!= whaat an idea sirji.

3. Austerity measures: in Sep 2013, Chindu ordered ministriesi. don’t hold seminars/conferences in 5star hotels

ii. don’t buy new vehiclesiii. Don’t give Executive class air tickets to bureaucrats. Make them pay full air

ticket for their wives and kids.iv. While sending delegations to foreign countries- keep the number of

members minimum.

These measures helped saving ~15-20k crore rupees.

Although on the other hand, some Expenditure increased because of



1. LPG quota increase ( 9 to 12): another 5k crores subsidy burden. (but thisscheme starts from Feb 2014 onwards. while financial year 2013-14 will end on

31st March 2014= hence LPG subsidy burden won’t bring that much pressure on2013-14 compared to 2014-15).

2. One Rank one pension: for retired Defense personnel =another 500 croreincreased Revenue expenditure.

But overall, net impact is: revenue deficit lower than his original budget estimate.

REVENUE (Crore Rs.) BE 2013 RE 2013 BE 2014

Expenditure 1436169 1399540 1550054

Receipt 1056331 1029252 1167131

Revenue Deficit (A-B) 379838 370288 382923

Revenue deficit as % of GDP 3.30% 3.30% 3%

Why Percentages did not change?

In above table focus on BE2013 vs RE2013 columns.You can see revenue deficit has decrease 379*** to 370***.But still revenue deficit as % of GDP is same 3.3%.

How is this possible? Classic principle of data interpretation! Observe:

Month X Month Y

numerator A. Revenue deficit 25 20

denominator B.GDP (lakh crores) 100 80

% Revenue deficit as % of GDP (A*100/B) 25% 25%

Despite decrease in numerator, the % will not decrease IF denominator (Base) isdecreased.Same way, inflation + policy paralysis= our GDP has gone down. Therefore,despite lower revenue deficit (in absolute numbers), its % of GDP remains thesame (3.3%)

Revenue Deficit 3% in 2014-15, is it possible?

For 2014-15 (BE2014), Chindu is even more optimistic: that Revenue deficit willbe just 3% of GDP. Will it? Well depends. He has played his cards:

money chindu’s move Will it help achieving 3% target?

He did not change direct/indirect

in theory, no. but he hopes that

1. manufacturing sector exportwill bring >300 billion



Revenueincoming

taxes (except automobile, mobileand a few things.)

dollars=> lot tax income2. that economy will recover,

leading to automatic rise intax collection.

Revenueoutgoing

he allotted grant to venture capitalfor SC, Nirbhaya Fund, Innovationfund

Less than 1500 crore. hence hardlyany negative impact on revenuedeficit target

one rank one pension hardly any negative impact

Subsidies (including interestsubvention on farm loans,education loans)

given below

Subsides

crore RE2013 BE2014

Subsides 2,55,516 2,55,708

You can see, he barely increased the subsidy allocation by ~200 crore rupees. So, again,subsides unlikely to have negative impact. (as an “absolute number” 2.5 lakh crore isvery high, but the relative change is very small- just ~200 crore).

Speaking of subsidies, you might be wondering, “Where does the plan and non-planexpenditure fall?”. It falls in the chart shown below



^this is just a preview, we’ll see about Subsidies, plan vs non-plan in detail, in a separatearticle later.

But overall, Chindu has played his cards appropriately- since it was an interim budget, hedid not announce major changes in tax, schemes and and subsidies. Therefore, 3%revenue deficit target should not be hard to achieve, unless

1. new government’s new budget is full of freebies and subsidies2. GDP doesn’t grow as expected.3. economic problems in US/EU reduce the demand of Indian exports.

Effective Revenue deficit

we know that Revenue deficit = difference between incoming vs outgoing Revenue.overall, the components were….

revenue incoming revenue outgoing

taxnon-tax

Interest paidsubsidies givenSalary, pension, office Expenditure.




Grants to state/UT/foreign countries.

Observe the last phrase: “Grants given to State/UT.”

such grants may be used for salary, office Expenditure= in that case we call itRevenue Expenditure. BUT it may happen that state/UT uses the grant money forcreation of capital assets e.g. bridges, buildings, roads, hospitals etc.= then it isnot “Revenue Expenditure”.it is “capital Expenditure”. We need to subtract it from Revenue deficit, to get thereal picture. Therefore,

Effective Revenue deficit= Revenue deficit MINUS grants given to State/UT forcreation of capital assets.**

**technically speaking, under FRBM act, grants given to following count

1. State Governments, UT2. constitutional authorities or bodies,3. autonomous bodies4. other scheme implementing agencies

As long as they’re for creation of “Capital assets”. Anyway, let’s check data: numbersnot important, only given to display the formula in action.

[Table] Effective revenue Deficit: absolute number

crores BE 2013 RE 2013 BE 2014

A. Revenue Deficit 379838 370288 382923

B. Grants given for creation of Capital assets 174656 121283 146581

Effective Revenue Deficit (A-B) 205182 249005 236342

[Table] Effective revenue Deficit: As % of GDP

As % of GDP BE 2013 RE 2013 BE 2014

Revenue Deficit -3.3 -3.3 -3

Effective Revenue Deficit -1.8 -2.2 -1.8

This ends the “Revenue” part of the budget. (both incoming vs Outgoing).



In the next article, we’ll see

1. Capital part of budget: Capital receipt and Capital Expenditure.2. Basics of Plan vs non-plan Expenditure.3. Deficits: budget deficit, fiscal deficit, primary deficit. How did Chindu manage to




achieve 4.6% fiscal defect 4.6%.

After that,

1. subsidies, plan vs non plan allocation2. Schemes, announcements, misc. highlights from the speech.

Visit Mrunal.org/Economy For more on Money, Banking, Finance, Budget, Taxation andEconomy.

URL to article: http://mrunal.org/2014/02/budget-interim-budget-2014-revenue-part-non-tax-receipts-expenditureeffective-revenue-deficit-loans-interest-dividend-explained.html

Posted By Mrunal On 22/02/2014 @ 02:35 In the category Economy

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mrunal interim budget 2014_ tax vs non-tax income & expenditure

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