Indian Economy Study Materials Part 3 - Public finance & fiscal policy

Budget

• An overall estimation of the revenue and expenditure for a specific time period generally from 1st April to 31st March

Important Articles

• Article 112 - Central Government Budget
• Article 202 - State Government Budget

• Article 266(1) - Consolidated Fund of India

• Article 266(2) - Public Accounts of India

• Article 267 -  Contingency Fund of India
• Article 280 - Finance Commission

Receipts

Revenue Receipts

• These amounts need not to be repaid to the payee.
• Does not results in reduction of Assets

• Revenue receipts are further classified into
1. Tax Revenue
2. Non -Tax Revenue

Capital Receipts

• Results in a reduction of assets(Usually Permanent assets).
• Some of the Capital receipts are as follows:
• Market Loans - Loans raised from Public
• Borrowing from RBI
• Amount raised by disposal of assets

Expenditure

Revenue Expenditure

• Expenditure incurred for normal day to day running of government

• It does not yeild any return.

• Some of the revenue Expenditure are as follows
• Expenditure on Defence
• Payment of Interest on loans
• Subsidies
• Pensions

Capital Expenditure

• Expenditure which results in creating permanent assets.
• Some of the Capital Expenditure are as follows
• Infrastructure Projects
• Machines
• Irrigation Projects
• Mines and Explorations