Saturday, December 22, 2018

COMPONENT OF THE GOVERNMENT BUDGET


u   COMPONENT OF THE GOVERNMENT BUDGET


MACRO ECONOMICS/PUBLIC FINANCE
Ø  MEANING OF GOVERNMENT  BUDGET
u   STATEMENT OF THE ESTIMATES OF THE GOVERNMENT RECEIPTS AND GOVERNMENT EXPENDITURE DURING THE PERIOD OF THE FINANCIAL YEAR. THE BUGET REVEALS:-
                  THE FINANCIAL PERFORMANCE OF THE GOVT OVER THE PAST ONE YEAR AND
                  THE FINANCIAL PROGRAMMES AND POLICIES OF THE GOVT FOR THE NEXT YEAR
u   GOVT BUDGET IS BASICALLY AN ANNUAL EXERCISE RELATING TO REVENUE AND EXPENDITURE POLICY OF THE GOVT.
u   BUDGET OF THE CENTRAL AND STATE GOVT
1.    112 OF THE CONSTITUTION REQUIRES THE CG TO PREPARE ANNUAL FINANCIAL STATEMENT FOR THE COUNTRY AS A WHOLE. IT IS PRESENTED BEFORE THE LOK SABHA AND RAJYA SABHA
2.    ARTICLE 202 OF THE CONSTITUTION REQUIRE EVERY STATE TO PREPARE THE BUDGET AND PRESENT BEFORE STATE LEGISLATIVE ASSEMBLY.
v     COMPONENT(STRUCTURE) OF THE BUDGET
u   TWO BROAD COMPONENTS:-
1.    REVENUE ACCOUNT ---REVENUE RECEIPTS AND REVENUE EXPENDITURE
2.    CAPITAL ACCOUNT------CAPITAL RECEIPTS AND CAPITAL EXPENDITURE
·         TWO BROAD COMPONENTS:-
1.    BUDGET RECEIPTS:- ESTIMATED MONEY RECEIPTS OF THE GOVT FROM ALL SOURCES DURING THE FISCAL YEAR AND IT INCLUDES REVENUE RECEIPTS AND CAPITAL RECEIPTS
2.    BUDGET EXPENDITURE:- ESTIMATED EXPENDITURE RELATED TO ITS DEVELOPMENT AS WELL NON DEVELOPMENT PROGRAMS
u   REVENUE RECEIPTS
1.    TAX RECEIPTS
2.    NON TAX RECEIPTS
·         MEANING OF REVENUE RECEIPTS
u   FEATURES OF REVENUE RECEIPTS:-
1.    THESE RECEIPTS DON'T CREATE ANY CORRESPONDING LIABILITY FOR THE GOVERNMENT
2.    DO NOT CAUSE ANY REDUCTION IN THE ASSETS OF THE GOVERNMENT
·         TAX RECEIPTS
·         TAX IS A COMPULSORY PAYMENT TO THE GOVT
·         THESE ARE CLASSIFIED AS :-
1.    PROGRESSIVE AND REGRESSIVE TAXES
2.    VALUE ADDED AND SPECIFIC TAXES
3.    DIRECT AND INDIRECT TAX
v     PROGRESSIVE AND REGRESSIVE TAX
1.    PROGRESSIVE TAX:- RATE OF TAX INCREASES WITH INCREASE IN INCOME
2.    REGRESSIVE TAX:- IT CAUSES A MORE BURDEN ON THE POOR THAN THE RICH
3.    VALUE ADDED TAX
4.    SPECIFIC TAX
5.    DIRECT TAX:-THE FINAL BURDEN OF WHICH IS BORNE BY THE PERSON ON WHOM IT IS IMPOSED
6.    INDIRECT TAX WHICH CAN BE SHIFTED TO OTHER PERSONS
u   NON TAX RECEIPTS
1.    FEES
2.    FINES
3.    ESCHEAT :- LEAVE PROPERTY WITHOUT A LEGAL HEIR. GOVT MAKES REVENUE OUT OF IT.
4.    SPECIAL ASSESSMENT
5.    INCOME FROM PUBLIC ENTERPRISES
6.    GRANTS AND DONATIONS
·         CAPITAL RECEIPT
o   CREATE A LIABILITY FOR THE GOVT:- LOANS TO THE GOVT
o   CAUSE REDUCTION IN THE ASSETS OF GOVT
u   MAY BE DEFINED AS THOSE RECEIPTS OF THE GOVT WHICH EITHER CREATE A LIABILITY FOR THE GOVT OR CAUSE A REDUCTION IN ITS ASSETS.
·         CAPITAL RECEIPT :-
I.        RECOVERY OF LOAN
II.        BORROWING  AND OTHER LIABILITIES:-
a)   GENERAL PUBLIC
b)   RBI
c)   REST OF THE WORLD
III. OTHER RECEIPT : DISINVESTMENT
v BUDGET EXPENDITURE
u   ESTIMATED EXPENDITURE OF THE GOVT RELATING TO ITS DEVELOPMENT AS WELL AS NON DEVELOPMENT PROGRAMMES DURING THE FISCAL YEAR.
a)   REVENUE EXPENDITURE
b)   CAPITAL EXPENDITURE
·         REVENUE EXPENDITURE
u   DOES NOT CREATE ANY ASSETS FOR THE GOVERNMENT :-
                  OLD AGE PENSION
                  SALARIES AND SCHOLARSHIP
u   DOES NOT CREATE ANY REDUCTION IN THE LIABILITY OF THE GOVT—GRANTS TO COPE UP WITH NATURAL CALAMITIES
u   IMPORTANT ITEMS OF REVENUE EXPENDITURE
a)   WAGE BILL OF THE GOVERNMENT
b)   INTEREST PAYMENTS
c)   EXPENDITURE ON SUBSIDIES
d)   DEFENCE PURCHASE
v     CAPITAL EXPENDITURE
a)   IT CREATES ASSETS FOR THE GOVT
b)   REDUCTION OF LIABILITY
u   IMPORTANT ITEMS OF CAPITAL EXPENDITURE:-
a)   EXPENDITURE ON LAND AND BUILDING
b)   ON MACHINERY AND EQUIPMENT
c)   PURCHASE OF SHARES
d)   LOANS BY CG TO SG

u   PLAN AND NON PLAN EXPENDITURE
u   PUBLIC EXPENDITURE( REVENUE + CAPITAL EXPENDITURE) IS ALSO CLASSIFIED AS PLAN AND NON PLAN EXPENDITURE
u   PLAN EXPENDITURE:-
a)   SPECIFIED PLANS AND PROGRAMMES OF DEVELOPMENT OR
b)   ASSISTANCE OF THE CG TO SG
c)   INCLUDES BOTH REVENUE AS WELL AS CAPITAL EXPENDITURE
u   NON PLAN EXPENDITURE :- WHICH IS NOT RELATED TO SPECIFIC PLANS AND PROGRAMMES OF DEVELOPMENT AS WELL AS NOT RELATED TO ASSISTANCE OF CG TO SG
u   TOTAL GOVT EXPENDITURE=REVENUE EXPENDITURE+CAPITAL EXPENDITURE OR (PLAN EXPENDITURE+NON PLAN EXP)



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