BUDGET JARGON

By

K.Vijay Kumar, M.A.,B.Ed., B.L.,

SUPERINTENDENT OF CENTRAL EXCISE

 

 

    Budget is basically a balance sheet of the country in simple terms of receipts and expenditure, but as the finance of the country is not that simple, there is a slight confusion over the various words used in the Budget. This article is an attempt to explain the budget words and figures in simple terms. The two major heads are Receipts and Expenditure. Now receipts are of two types Revenue Receipts and Capital Receipts. Again Revenue Receipts are two, tax revenue and non-tax revenue. Capital Receipts are three types –

 

1)    Recoveries of loans, 2) Other receipts, and 3) Borrowings and other liabilities

 

RECEIPTS

 

 

 

Revenue Receipts             Capital Receipts

        

    

Tax Revenue Non-tax Revenue Recoveries Other Borrowings

                            Of loans Receipts and other

                                         Liabilities

 

    Total Receipts = Revenue Receipts + Capital Receipts.

 

    Similarly expenditure has two heads, plan expenditure and non-plan expenditure which are again sub-divided. Plan expenditure has two heads, on Revenue account and on Capital account and Non-plan Expenditure also includes two heads Revenue Account and Capital account. Revenue expenditure includes interest payments.

 

                    

 

 

 

 

 

 

 

 

 

EXPENDITURE

 

 

 

     PLAN                     NON - PLAN

        

    
 

On revenue On capital Revenue On capital

Account Account Account Account                                                    

                        (includes interest payments)

 

 

The total expenditure is the sum of plan expenditure and non-plan expenditure. Revenue expenditure is the sum of plan expenditure and non-plan expenditure on revenue account. Similarly capital expenditure is the sum of the plan and non-plan expenditure on capital account.

 

Coming to deficits – There are three kinds of deficits, Revenue Deficit, Budgetary Deficit and Fiscal Deficit.

 

Revenue Deficit is the difference between Revenue Receipts and Revenue Expenditure. Budgetary deficit is the difference between total receipts and total expenditure.

 

Fiscal deficit is the difference between the sum of (Revenue Receipts, Recoveries of loans and other receipts) and Total Expenditure. This is also the same as the sum of Borrowings and other liabilities and Budgetary Deficit.

 

 

Now let us look at this year's Budget

 

                                        Rs. in Crores

 

1.    Revenue Receipts                            1,30,345         (2+3)

2.    Tax Revenue            --    97,310

3.    Non-Tax Revenue        --    33,035

4.    Capital Receipts                             67,737     (5+6+7)

5.    Recoveries of loans        --     7,048

6.    Other receipts            --     5,001

7.    Borrowings & other liabilities    --    55,688

8.    Total Receipts                                1,98,082     (1+4)

9.    Non-Plan Expenditure                            1,49,975     (10+12)

10.    On revenue account        --    1,28,353

11.    Of which interest payments    --     60,000

12.    On capital account        --     21,622

13.    Plan expenditure                             54,685     (14+15)

14.    On revenue account        --     33,467

15.    On capital account        --     21,218

16.    Total Expenditure                            2,04,660     (9+13)

17.    (10+14)Revenue expenditure    --    1,61,820

18.    (12+15) Capital Expenditure    --     42,840

19.    REVENUE DEFICIT        --     31,475        (1-17)

20.    BUDGETARY DEFICIT        --     6,578        (8-16)

21.    FISCAL DEFICIT        --     62,266        (1+5+6)-16=7+20

 

 

It can be seen that of the total revenue receipts of 1,30,345 crores, over 97,000 crores come from taxes (and this is only the taxes net to the centre). The capital receipts of over 67,000 Crores includes borrowings and liabilities of over 55,000 crores. Of the Non-plan expenditure of 1,28,000 crores, 60,000 crores account for interest payment. That is our interest liability is more than the borrowings or we are borrowing just to pay interest ! Out of an expenditure of above 2 lakhs crores, only about 40,000 crores i.e, about 20% is spent on capital account.

 

On the revenue account we have a deficit of over 31,000 crores which is about 15% of the total receipts.

 

The Budgetary deficit is over 6000 crores. This is stated earlier is the difference between total income and total expenditure. This looks not very alarming but we must never forget that our interest liability is 60,000 crores! The fiscal deficit i.e, budgetary deficits and borrowings and liabilities is a whopping 62,000 crores.

 

To reap : (number in brackets are the serial nos given in the table above)

 

Revenue Receipts        =        Tax Revenue     +    Non –Tax Revenue

    (1)                        (2)            (3)

Capital Receipts        =    Recoveries of Loans + Other receipts + Borrowings &

                                         Other liabilities

    (4)                        (5)     (6)        (7)

 

Total Receipts            =    Revenue Receipts    +    Capital Receipts

    (8)                    (1)                (4)

Non-plan expenditure        =    On revenue account    +    On capital account

                    Including interest        

    (9)                    (14)                (12)

 

Plan Expenditure        =    On revenue account    +    On capital account

    (13)                    (14)                (15)

 

Total Expenditure        =    Non-plan expenditure    +    Plan expenditure

    (16)                    (9)                (13)

                =    Revenue expenditure    +    Capital expenditure

1. (18)
   

Revenue Deficit        =    Revenue Receipts    -    Revenue expenditure

    (19)                    (1)                (17)

Budgetary Deficit        =    Total receipts        -    Total expenditure

                        (8)                (16)

 

Fiscal Deficit            = (Revenue Receipts + Recoveries of loans + Other Receipts)

(21)                    (1)     +        (2)        (6)

 

                -    Total expenditure.

                        (16)

                =    Borrowings and other liabilities    + Budgetary Deficit

                     (7)             (20)

EXCISE LAW TIMES – 01.12. 1996 – A 76