• A virtual account meaning • What is Investment companies • Types of investment companies • Reasons for selection of such companies for investment; • Coca cola • Tata motors • Bajaj auto • Agarbatti ( incense sticks ) • Reliance industries • Tata consultancy service

1. GLS BBA
BUSINESS ENVIORNMENT
PRACTICAL
ASSIGNMENT WORK 2019-20
ROLL NUMBER: – 91 - 100
SEMESTER - 5
SUBMITTED TO: - PROF. MINOUTI JANI

2. NAME OF STUDENTS
91. DHRUVI ADHVARYU
92. HUMA ANSARI
93. YOGITA ATTAL
94. LAKSHIT BOHRA
95. SAHIL CHANDARANA
96. VASANT CHAUDHARY
97. KHUSHI DAVE
98. MUSKAN DUGAL
99. CHANDNI GOPANI
100. KUSHANG GROVER

3. TOPIC
THE REVENUE AND EXPENDITURE OF INDIA
AND
A FISCAL POLICY TO CONTROL FISCAL
DEFICIT

4. INDEX
 Revenue – sources of revenue
 Tax revenue and non tax revenue
 Union budget analysis
 Expenditure of government
 Need, types, objectives of government expenditure
 What is fiscal policy
 Concept and types of fiscal policy
 Different measures to control fiscal deficit

5. REVENUE – sources of revenue
In common language revenue means tax or income. But in a business concern
revenue means sales proceeds of goods or services or it is the price of goods
sold or services rendered to the customers. "Revenue is the monetary
expression of the aggregate of products or services transferred by an
enterprise to its customers during a period of time". The revenue for a given
period is equal to the inflow of cash and receivables (debtors) from sales made
in that period. Thus:
Revenue = Amount received in cash + Receivable
The sources of revenue are:
1. Sale proceeds of goods or services (Sales A/C).
2. Interest received on investment (Interest A/C credit balance).
3. Dividend received on share (Dividend A/C).
4. Discount received from creditors (Discount received account credit
balance)
5. Commission received from customers (Commission A/C credit balance).
6. Profit on sale of assets (except goods).
Thus for a trader;
Direct and Indirect Taxes
The most fundamental classification of taxes is based on who collects the taxes
from the tax payer.
Direct Taxes, as the name suggests, are taxes that are directly paid to the
government by the taxpayer. It is a tax applied on individuals and organizations
directly by the government e.g. income tax, corporation tax, wealth tax etc.

6. Indirect Taxes are applied on the manufacture or sale of goods and services.
These are initially paid to the government by an intermediary, who then adds
the amount of the tax paid to the value of the goods / services and passes on the
total amount to the end user. e.g sales tax, service tax, excise duty etc.
A. Total tax revenue
Tax revenue is defined as the revenues collected from taxes on income and
profits, social security contributions, taxes levied on goods and services, payroll
taxes, taxes on the ownership and transfer of property, and other taxes. Total
tax revenue as a percentage of GDP indicates the share of a country's
output that is collected by the government through taxes. The tax burden is
measured by taking the total tax revenues received as a percentage of GDP.
B. Non-Tax Revenue:
Non-Tax Revenue is the recurring income earned by the government from
sources other than taxes.
Interest Receipts:
This largest non-tax source of Central Government’s revenue receipts is the
interest it earns mainly on the loans it has advanced to State Governments, to
financial and industrial enterprises in the public sector.
Surplus Profits of the Reserve Bank of India (RBI):
The surplus profits of the RBI is also a part of the revenues of the Central
Government. In recent years, these have been quite substantial because of the
large borro-wing by the Government from the RBI against Treasury Bills for
financing the Five-Year Plans.

7. Currency, Coinage and Mint:
The Govern-ment also derives income from running the Currency Note Printing
Presses. Moreover, profits are made from the circulation of coins — this profit
being the difference between the face value of the coins and their
manu-facturing cost.
Railways:
The railways in India are owned and run by the Government of India.
Accor-dingly, they pay a fixed dividend to general revenues, i.e., to the Central
Government, on the capital invested in the railways. Besides, a part of the net
profits made by the railways is also payable to the Central Government.
Profits of Public Enterprises:
Public enter-prises owned by the Central Government, e.g., the Steel Authority
of India (SAIL), Hindustan Machine Tools (HMT), Bharat Heavy Electricals
Ltd. (BHEL), State Trading Corporation (STC). The profits of such Public
Sector Units (PSUs) are another source of revenue for the Government of India.
Total government revenues in India rose 14.4 percent to INR 4.00 trillion in
April-July 2019-20 from INR 3.49 trillion in the same period of the previous
fiscal year. Government Revenues in India averaged 3008.51 INR Billion from
1997 until 2019, reaching an all time high of 16660.55 INR Billion in March of
2019 and a record low of 0.82 INR Billion in April of 1999.

8. In INDIA
After the 1991 economic liberalization, India achieved 6-7% average GDP
growth annually.
Economy of India.
Statistics
Budget balance ₹−12.25 trillion (US$−180 billion) (2018)
Revenues ₹39.29 trillion (US$570 billion) 20.60% of GDP (2018)
Expenses ₹52.03 trillion (US$750 billion) 27.28% of GDP (2018)
Economic aid $3.09 billion (2017)

9. Union Budget 2019-20 Analysis
Budget Highlights
 Expenditure: The government proposes to spend Rs 27,86,349 crore in
2019-20, which is 13.4% above the revised estimate of 2018-19.
 Receipts: The receipts (other than net borrowings) are expected to
increase by 14.2% to Rs 20,82,589 crore, owing to higher estimated
revenue from corporation tax and dividends.
 GDP growth: The government has assumed a nominal GDP growth rate
of 12% (i.e., real growth plus inflation) in 2019-20. The nominal growth
estimate for 2018-19 was 11.5%.
 Deficits: Revenue deficit is targeted at 2.3% of GDP, which is higher
than the revised estimate of 2.2% in 2018-19. Fiscal deficit is targeted at
3.3% of GDP, lower than the revised estimate of 3.4% in 2018-19. Note
that the government is estimated to breach its budgeted target for fiscal
deficit (3.3%) in 2018-19 and the medium term fiscal target of 3.1% in
2019-20.
 Ministry allocations: Among the top 13 ministries with the highest
allocations, the highest percentage increase is observed in the Ministry of
Agriculture and Farmers’ Welfare (82.9%), followed by Ministry of
Petroleum and Natural Gas (32.1%) and Ministry of Railways (23.4%).

10. Expenditure of government
In order to carry on their functions, governments must obtain the services of
labour and other factor units and (except in a completely socialist economy)
acquire goods produced by private business firms.
Public expenditure consists of expenditure by the central government and state
governments, local authority (such as municipalities and public corporations),
with central government accounting for the major portion of such expenditure.
Thus the central government is required to maintain good roads, bridges,
defence activities, canals and harbours, to protect trade, to maintain the coinage
and to provide social security, education and religious instruction.
Categories of Government Expenditures:
1. Direct government purchases of goods and services.
Purchases of goods and services include government expenditures on the ser-
vices of individuals, such as those in the armed forces, and on goods, such as
food, medicine schools, hospitals, highways, and motor cars. Many of the
purchases the government makes are for goods and services that are provided
for all members of the society — including those who have not paid for then
use.
When a good or service is provided for everyone and no one can be excluded
from its use, it is termed a public good. Flood control and national defence
systems are examples of public goods. When government provides a good or
service that could be sold in a private market, such as education or fire
protection, it is providing a quasi-public good. The provision of public and
quasi-public goods is a widely recognized function of the government.
2. Transfer Payments
A second category of government expenditure is transfer payments, which are
payments from the government for which nothing is received in return. Social
security benefits, compensation to unemployed people, benefits to senior
citizens and pensions to retired government employees and freedom fighters are
all examples of transfer payment programs.

11. 3. Interest paid on borrowed funds
Interest paid on borrowed funds is another type of government expenditure. At
times, government units finance some of their activities through borrowing, and
the interest on those borrowed funds is an expense that the government unit
must meet.
4. Contributing to the operation of various public enterprises
The government may also incur expenses for running or contributing to the
operation of various public enterprises such as toll roads, airports, and hospitals,
or for providing intergovernmental grants. These grants are given primarily by
the Central Government to State and Local Governments.
NEED FOR GOVERNMENT EXPENDITURES
Government spends money for a variety of reasons, including:
 To supply goods and services that the private sector would fail to do, such
as public goods, including defence, roads and bridges; merit goods, such
as hospitals and schools;and welfare payments and benefits, including
unemployment and disability benefit.
 To achieve supply-side improvements in the macro-economy, such as
spending on education and training to improve labour productivity.
 To reduce the negative effects of externalities, suchas pollution controls.
 To subsidies industries which may need financial support, and which is
not available from the private sector.
 To help redistribute income and achieve more equity.
 To inject extra spending into the macro-economy, to help achieve
increases in aggregate demand and economic activity. Such a stimulus is
part of discretionary fiscal policy.

12. TYPES OF GOVERNMENTEXPENDITURES
Current Expenditures or Government final consumption expenditure goods and
services for current use to directly satisfy individual or collective needs of the
members of the communit.
Capital Expenditures or fixed capital formation (or government investment) -
government spending on goods and services intended to create future benefits,
such as infrastructure investment in transport (roads, rail airports), health (water
collection and distribution, sewage systems, communication (telephone, radio
and tv) and research spending (defence, space, genetics) .
Transfer payments - spending that does not involve transactions of goods and
services, but instead represent transfers of money, such as social security
payments, pensions and unemployment benefit.
Objectives of a Government Budget:
It should be kept in mind that rapid and balanced economic growth with
equality and social justice has been the general objective of all our policies and
plans. General objectives of a government budget are as under:
 Economic growth:
 Reduction of poverty and unemployment:
 Reduction of inequalities/Redistribution of income:
 Redistribution of income:
 Reallocation of resources:
 Price stability/Economic stability:

13. FISCAL POLICY
Fiscal policy is prepared to ensure the economic growth of a country. The
government of a country takes responsibility for the well-being of the
countrymen. That’s why every spending of the government should be in the
right order. And to do so, the government needs to collect the taxes from
businesses and individuals of the country
Though the actual purpose of the fiscal policies are argued among the ministers
of the country, in essence, the objective of a fiscal policy is to take care of the
local needs of the country so that the national interest can be kept as an overall
goal.
Two Types of Fiscal Policy
1. Expansionary Fiscal Policy:
The government uses this by two ways. Either they spend more money on
public works, provide benefits to the unemployed, spend more on projects that
are halted in between or they cut taxes so that the individuals or businesses
don’t need to pay much to the government.
People who favour the government spending prefer it over cutting taxes
because they believe that if the government spends more, the unfinished
projects would be completed.
On the other hand, individuals who prefer cutting taxes talk about it because
they believe that by cutting taxes the government would be able to generate
more cash into consumers’ hands.
Expansionary policy isn’t easy to apply for state government because state
government is always on a pressure to keep a budget that is balanced
2. Contractionary Fiscal Policy:
.
The nature of this sort of policy is just the opposite. In this case, the government
spending is cut as much as possible and the rate of taxes is increased so that the
purchasing power of the consumer gets reduced.
Taking away money from the hands of the consumers can be dangerous because
that means businesses will not be able to sell off goods and services and as a
result, the economy will take a sure-shot hit which only can be reversed by
taking the expansionary fiscal policy.

14. CONCEPTS OF FISCAL POLICY
Fiscal surplus and fiscal deficit are two important concepts of this policy. The
idea behind these two concepts is simple:
Fiscal surplus
When the government spends less than it earns, then the government creates a
fiscal surplus. This concept sounds great, but normally it’s very difficult to
create a surplus in reality.
Fiscal deficit
When the government spends more money than it earns, then it is called a fiscal
deficit. This concept is very much known to the public because the media and
newspapers talk a lot about it.
When a government creates a fiscal deficit, it needs to take the debt from
external sources and then bear the cost (if any). Fiscal deficit, as you can expect,
is much more common phenomenon than fiscal surplus.

15. A fiscal policy to control fiscal deficit
Measures to Reduce Government Deficit
 Increased emphasis on tax-based revenues and appropriate measures to
reduce tax evasion.
 Disinvestment should be done where assets are not being used effectively
 Reduction in subsidies by the government will also help reduce the deficit.
 Try and avoid unplanned expenditures.
 Borrowing from domestic sources.
 Borrowing from external sources.
 A broadened tax base may also help in reducing the government deficit.
In the Indian context, the following measures can be adopted to reduce fiscal
deficit and thereby to reduce inflationary pressures in the economy. We first
spell out the measures which may be adopted to reduce government expenditure
and then describe measures for raising Government revenue.
Measures to Reduce Public Expenditure:
In the context of the Indian economy, the following measures can be adopted to
reduce public expenditure for reducing fiscal deficit and thereby check inflation.
1. A drastic reduction in expenditure on major subsidies such as food,
fertilisers, exports, electricity to curtail public expenditure. A huge sum of
money equal to Rs. 20,000 crores are spent on major subsidies on food,
fertilisers, export promotion by the central government. Without a drastic cut in
subsidies over time it is difficult to reduce public expenditure to an appreciable
degree.
2. Die huge sum of money is spent by the government on LTC (Leave
Travelling Concessions), bonus, leave encashment etc. A reduction in
expenditure on these is desirable if the government is determined to cut public
expenditure.

16. 3. Another useful measure to cut public expenditure is to reduce interest
payments on past debt. In India, interest payments account for about 40
per cent of expenditure on revenue account of the central government. In
our view, funds raised through disinvestment in the public sector should be used
to retire a part of old public debt rather than financing current expenditure.
Retirement of public debt quickly will reduce burden of interest payments in
future.
4. Budgetarysupport to public sector enterprises other than infrastructure
projects should be substantially reduced. Further, public sector enterprises
should be asked to raise funds from the market and banks.
5. Austerity measures should be adopted to curtail unnecessary
expenditure in all government departments.
Increasing Revenue from Taxation:
To reduce fiscal deficit and thereby check rise in inflation rate, apart from
reducing government expenditure, government revenue has to be raised.
The obvious way to reduce a budget deficit is to increase tax rates and cut
government spending. However, the difficulty is that this fiscal tightening can
cause lower economic growth – which in turn can cause a higher cyclical deficit
(government get less tax revenue in a recession). The best way to reduce fiscal
deficits depends on the situation a country is in.
A budget deficit occurs when a government spending is greater than tax
revenues. This leads to an accumulation of public sector debt. If the deficits are
unsustainable, this can cause rising bond yields (higher interest payments) and
in the worse case, lead to a loss of confidence in the government. Though this is
quite rare for countries with their own currency.