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Formulation of Indian Union Budget


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Formulation of Indian Union Budget

  1. 1. Formulation of Budget in India Presented By: Deepa Nayak Indicus Analytics Pvt. Ltd.
  2. 2. Origin <ul><li>Derived from French word ‘Bougette’ meaning “Sack or Pouch”. </li></ul><ul><li>Bag used by the British chancellor to keep his papers to be presented to the parliament. </li></ul><ul><li>Present sense of the term was used for the first time in 1873. </li></ul>
  3. 3. History of Budget - India <ul><li>First Budget presented in 26 th November 1947 by finance minister Sir R K Shanmugam Chetty. </li></ul><ul><li>Plural Budget – Railway and General Budget </li></ul><ul><li>1921- Separation of Railway budget from General Budget on the recommendation of Acworth Committee. </li></ul>
  4. 4. Budget Types <ul><li>I. Line item or traditional or incremental Budgeting : </li></ul><ul><li>Budget in terms of object-wise (line item) classification. </li></ul><ul><li>II. Performance Budgeting : </li></ul><ul><li>Emphasizes purpose of expenditure rather than the items of expenditure. </li></ul>
  5. 5. Budget Types …contd.. <ul><li>III. Programme Budgeting (PPBS): </li></ul><ul><li>Selecting the best out of a </li></ul><ul><li>number of available programmes. </li></ul><ul><li>IV. Zero Based Budgeting (ZBB): </li></ul><ul><li>Opposite of incremental budgeting. </li></ul><ul><li>Departmental demands are reviewed comprehensively and all expenditure are approved. </li></ul>
  6. 6. Outcome Budget <ul><li>&quot;Outlays do not necessarily mean outcomes. </li></ul><ul><li>The people of the country are concerned with outcomes….“ P Chidambaram </li></ul><ul><li>Introduced in Budget 2005-06 to measure the development outcomes of all major programmes. </li></ul>
  7. 7. Formulation of Budget <ul><li>Main Players </li></ul><ul><li>Ministry of Finance </li></ul><ul><li>Administrative Ministries </li></ul><ul><li>Planning Commission </li></ul><ul><li>Comptroller & Auditor General </li></ul>
  8. 8. Stages of Formulation <ul><li>Stage I Preparation of Estimates – </li></ul><ul><li>Sending Circulars by Finance ministry </li></ul><ul><li>to different ministeries. </li></ul><ul><li>Particulars of the Form </li></ul><ul><li>Actual figures of the previous year </li></ul><ul><li>Sanctioned Budget estimates for current year </li></ul><ul><li>Proposed estimates for next year </li></ul><ul><li>Actual figures of current year </li></ul><ul><li>Actual figures for the corresponding period of previous year. </li></ul>
  9. 9. Stages of Formulation …Contd. <ul><li>Stage II Scrutiny & Consolidation of estimates by </li></ul><ul><li>Deptts. & Ministeries </li></ul><ul><li>Stage III Scrutiny by Finance Ministry </li></ul><ul><li>Settlement of disputes </li></ul><ul><li>Stage IV Consolidation by the Finance Ministry </li></ul><ul><li>Preparation of estimates of revenue </li></ul><ul><li>Stage V Approval of the cabinet </li></ul>
  10. 10. Enactment of Budget - Stages <ul><li>I. Presentation of Budget – Rule 213 </li></ul><ul><li>II. General Discussion – 3 to 4 days </li></ul><ul><li>III. Voting on Demands for Grants </li></ul><ul><li>IV. Passing of Appropriation Bill </li></ul>
  11. 11. Execution of Budget <ul><li>Implementation of the Budget after enactment by Parliament </li></ul><ul><li>Executed by various ministeries/departments under control of Finance Ministry </li></ul>
  12. 12. THANK YOU