This document provides details of a 3-day training on budget analysis conducted by the Centre for Budget and Governance Accountability and YUVA. Day 1 focused on introducing basic budget concepts through an exercise comparing a hypothetical NGO budget to a government budget. It also covered understanding the Union budget structure and documents. Day 2 involved analyzing key sectors in the Union budget and understanding information that can be derived. Day 3 discussed the political process of budget making and the role of civil society in influencing budgets. The training aimed to build awareness of budgeting and its importance for development work.

1. Conducted by Centre for Budget and Governance Accountability, Delhi and YUVA,
Mumbai
April 14TH
to 16th
, 2007 at YUVA Centre, Kharghar, Navi Mumbai
INTRODUCTION
The training aims at building awareness and capacity on the complex procedure
of budgeting and developing understanding about the importance and relevance
of Union and State budgets with work related to development sector. The
training also aims to develop the skills on budget analysis. Over the past years it
was realized by all of us working in the development sector that the sectors we
are involved in has strong relationship with different budgetary allocations of the
Union and State Government. The direction/nature of our intervention is
determined by finances allocated to sectors we are involved in. Thus it is very
important for us to understand the process of budgeting and hence be able to
analyse budgets. This would help in working for our own area budgets and
hence determine strategies to influence budgets.
OBJECTIVES:
• To develop a basic understanding on Budget Analysis
• To understand the relevance of budget work
• To understand the link between union budget and organizational
work/targets
• To be able to use the data, generated by budget work, in efforts for advocacy
• To have a critical view of Union budget 2007 with special reference to the
social sector - children, health and gender
TRAINING ON BUDGET ANALYSIS

2. Training Design
Session / Time Focus Content
Day 1
10.00 AM-10.30 AM
Welcome Note
Day 1
10.30 AM- 11.15 AM
Ice Breaking (Some appropriate exercise)
11:15-11:30 AM Tea
Day 1
11:30 - 1.00 PM
Drawing an
Analogy between
the Budget of a
Hypothetical
NGO and the
Budget of a
Government
(Group Work)
Annual Budget of a hypothetical
NGO
List of Objectives of the
hypothetical NGO
The task for each Group would be
to match the Objectives with funds
allocated in the Budget.
Such an exercise is intended to
convey the meaning of Budget.
Though narrow in scope, it would
convey a comprehensible meaning
which is that “Budget is nothing
but a series of goals with price-
tags attached”.
Day 1
2.00 PM- 2.45 PM
Findings of
“Budget
Analysis” by the
Participants
Answers to a few Questions:
• How much money is going for
which Objective?
• What is the Pattern in allocations
over three years?
• Is this Pattern of allocations
justified?
Day 1
2.45 PM- 3.15 PM
What Lessons
are we drawing
about the impact
of Budget from
the above
exercise?
Budget is central to Governance
Allocations reflect priorities
Scrutiny of the Budget reveals
important information for policy
advocacy
3:15-3:30 PM Tea
Day 1
4.00 PM- 5.00 PM
Similarities and
Differences
between Budget
of a private
entity/ household
Explaining the terms/ concepts
like:
Receipts & Expenditure -
distinction between Revenue and

3. and
the Government
Budget
Capital
Tax - distinction between Direct
and Indirect Taxes
Deficit & Debt
Day 2
9.30 AM-10.00 AM
Recap of Day 1
Day 2
10.00 AM- 11.30 AM
Introducing the
Participants to
Union Budget
Structure of the Union Budget
Consolidated Fund
Contingency Fund
Public Account
Revenue and Capital Budgets
Plan and Non Plan Expenditures
General, Economic and Social
Services
Demands for Grants and
Appropriations
Revenue, Fiscal and Primary
Deficits
GDP
Day 2
11.45 AM- 1.15 PM
Union Budget
documents
How do we read
and use them?
“Budget Highlights”- the most
simple document
Quick reading of “Budget at a
Glance” to identify the terms
explained earlier
Annual Financial Statement
Expenditure Budget
Roadmap to reading the technical
documents through Major heads,
Minor heads, and Demand Nos.
Day 2
2.15 PM- 3.45 PM
Analysing the
budget
Understanding
Information
derived through
budget analysis
Group work on 4 important sectors
/ themes involving use of Union
Budget documents
Supplementary information on
those Sectors/ themes
Generated by budget work
Other relevant data

4. 3:45-4:00 PM Tea
Day 2
4:00-4:30
Presentations from the Group Work
Day 2
4.30 PM- 5.30 PM
Importance of
sectoral analysis
of budgets
Budgeting for children, women,
dalits and adivasis – the
marginalised
Day 3
9.30 AM-10.00 AM
Recap of Day 2
Day 3
10.00 AM-11.00 AM
Budget making
as a Political
Process
Brief discussion of Budget
processes
Influence of Institutional and
Individual Actors in shaping up a
Budget
Day 3
11.15 AM-1.00 PM
Role and
relevance of Civil
Society Budget
work in the
contemporary
policy regime
Importance of assessing
Government’s priorities from its
Budgets (Brief)
Success Stories of Civil Society
Budget work
Day 3
2.00 PM- 4.00 PM
How can we
influence the
political process
of Budget
making
Strategizing the use of budget
analysis
Day 3
4.30 PM- 5.30 PM
Evaluation
Clarifications
Way forward

5. DAY I
ICE-BREAKING
To begin with the workshop ice breaking exercise was conducted in which all the
participants were divided in pair and were asked to take interviews of their
partners. Then each participant will introduce their partners to the entire group
with their expectations from the workshop.
SESSION I
Drawing an Analogy between the Budget of a Hypothetical Household
and the Budget of a Government
All the participants were divided in 4 groups and were asked to prepare a budget
of a hypothetical household
Group Work Exercise
Assumptions:
• You are a resident of Mumbai City (includes Mumbai Suburbs, BMC Area, Navi
Mumbai, etc)
• No gender discrimination here, you can either be a woman or a man, as you
wish
• You are the only earning member in your family
• Size of your family - husband (40), wife (37), daughter (15), son (12) and
mother-in-law (65)
• You are residing in a rented accommodation
• Monthly household income from your salary – Rs. 18, 283 (includes 40% of
basic salary as house rent allowance and Rs. 1, 000 as travel allowance)
• Provident Fund (PF) facility is available at a maximum of 12% of your basic
salary.
• No other staff welfare benefits like medical insurance, gratuity, etc.
Task:
• You have to prepare the monthly budget (April 2007) of your family and make
a presentation of it in the larger group
• Please give account (in detail) for every rupee that you pretend to spend
• Explanations, such as why, what & how will help the larger group to
understand the purpose/objective of such spending better (for e.g. hospital
expenses of your mother-in-law who is suffering from diabetes)

6. The exercise builds up the session objectives of understanding difference
and similarities between Public and Private budget:
 Expectations on income are more clear in case of private budgets and the
same is less certain in case of public budget.
 In case of private budgets a clear idea about income is made and then the
items of expenditure are included. On the other hand, in case of public
budgets a clear idea about expenditure is made first and then the
revenue sources are identified.
 In case of both the budgets, deficit leads to debt.
 Formulation of private budget depends upon present income, wealth stock
and other limitations. For public budgets such limitations are flexible.
 Sources of borrowing include both institutional as well as private channels
in case of private budgets. In case of public budgets all borrowings are made
through institutional channels.
 Private budgets cannot run on deficit for a long time. Public budgets can
take resort to deficit financing for a long time.
 Motive for private budgeting is maximum private benefit. So, the aim is at
attaining a surplus or maintaining a balance. In case of public budgets, the
motive is to maximise social welfare. Therefore, many times deficit is
preferred to a surplus or balance.
 Private budget is a household management tool. Public budget is a
statement of policy priorities.
.
Union budget is not a technical document that only persons with specialized skills
can handle. It is very similar to the budget that we prepare in our houses.
Session II
Introduction to the Union Budget and the Basic Concepts of Budgets
The session’s objective was to introduce the basic concepts of Union Budget,
explaining the budget terminology.
Union Budget is the most comprehensive platform for the Central Govt. to give
shape to its policy priorities. All State Budgets dependent on ‘untied’ resources
coming to them from the Union Budget:
- Share in Gross Tax Revenue
- Non Plan Grants
- Central Assistance for State & UT Plans

7. Union Budget is the largest platform for policy changes in India, whether
progressive policies/ market driven reforms/ tax reforms.
Expenditure priorities of Union Budget 2007-08
Let’s suppose that total Expenditure from Union Budget 2007-08 is Rs. 100/-
The Central Govt. spend this Rs. 100/- in 2007-08 as:
1. Interest Payments: Rs. 25
2. Defence: Rs. 15
3. Economic Services: Rs. 15
4. Social Services: Rs. 14
5. General Services: Rs. 8
6. Subsidies: Rs. 9
7. Non Plan Grants to States and UTs: Rs. 6
8. Central Assistance for State & UT Plans: Rs. 8
Functional Classification of the Budget
• General Services: Government expenditures for the maintenance of law and
order, defence of the country, and running of the general organs of the
Government, interest payments, etc.
• Social Services: Expenditures on education, health, water supply and
sanitation, social security and welfare, welfare of SCs, STs and OBCs, housing
and urban development, etc.
• Economic Services: Expenditures on various kinds of services usually leading
to income generating activities, such as foreign trade and export promotion,
economic development programmes under various ministries, agriculture and
allied services, industry and minerals, rural development, transport and
communications, etc.
• Others: Statutory Grants-in-aid, ways and means advances, and other loans.

8. Major components of spending in the Union Budget
The major components of expenditure from the Union Budget are:
1. Interest Payments:
- interest payments &
- debt servicing
(expenditure made by Finance Ministry)
2. Defence:
- total outlay on Defence Services
(excluding civil estimates for Defence such as Pensions)
(entire expenditure to be made by Ministry of Defence)
3. General Services:
- pensions,
- police,
- organs of state
4. Economic Services:
- agriculture & allied activities - rural development
- irrigation and flood control - industry and minerals
- transport and communications - energy
5. Social Services:
- education - youth affairs & sports - art and culture
- health and family welfare - water supply and sanitation
- housing and urban development
- information and broadcasting - social welfare & nutrition
6. Subsidies:
-food subsidy - fertilizer subsidy - subsidy on petroleum
- Funds for most of the important Line Ministries come through these three
components.
- This is the most important pitch for Advocacy on the Union Budget.

9. Plan and Non Plan expenditure
Plan Expenditure Non-Plan Expenditure
• Plan Expenditure is meant for
financing the schemes and
programmes especially framed
under the given Plan (the Five
Year Plan) or the unfinished tasks
of the previous Plans.
• Once a programme or scheme
pursued under a specific Plan
completes its duration, the
maintenance cost and future
running expenditures on the
assets created or staff recruited is
not regarded as Plan Expenditure.
• Any expenditure of the
government that does not fall
under the Plan Expenditure is
Non-Plan Expenditure.
Composition of Plan & Non Plan
expenditure in Union Budget 2007-08
32%
68%
Plan Expenditure
Non
PlanExpenditure

10. Difference between Plan and Non Plan
S.N. Major Component Total
(Rs.)
Plan
(Rs.)
Non
Plan
(Rs.)
1 Interest Payments 25 Nil 25
2 Defence 15 Nil 15
3 Economic Services* 15 11.35 3.65
4 Social Services* 14 12.5 3.65
5 General Services* 8 0.15 7.85
6 Subsidies 9 Nil 9
7 Non Plan Grants to States & UTs 6 Nil 6
8 Central Asst. to States & UT
Plans
8 8 Nil
Total Union Budget 2007-08 100 32 68
*Figures for 3, 4, and 5 above are approximations
Revenue and Capital Expenditure
The entire Union Budget (i.e. total expenditure by the Central Govt.) can also be
divided into two distinct categories called Revenue Expenditure and Capital
Expenditure
Revenue Expenditure Capital Expenditure
• Capital Expenditure is usually
meant for increasing Govt.’s
assets or reducing its liabilities.
- It is, however, not necessary
that the assets created should be
productive or they should even be
revenue generating.
- Once the Govt. decides to
spend for the creation of an
asset, Capital Expenditure
bears all charges for the first
construction of the project,
while Revenue Expenditure
bears all subsequent charges
for maintenance and all
working expenses.
• Revenue Expenditure usually
does not have any impact on
creation of assets or reduction of
liabilities of the Govt.

11. Difference between Revenue and Capital Expenditure
S.N. Major Component Total (Rs.) Revenue
(Rs.)
Capital
(Rs.)
1 Interest Payments 25 25 Nil
2 Defence 15 8.50 6.50
3 Economic Services* 15 11 4
4 Social Services* 14 13.50 0.50
5 General Services* 8 6 2
6 Subsidies 9 9 Nil
7 Non Plan Grants to States &
UTs
6 6 Nil
8 Central Asst. to State & UT
Plans
8 8 Nil
Total Union Budget
2007-08
100 87 13
*Fig. For 3, 4 an 5 above are hypothetical
Composition of Revenue and Capital
Expenditure in Union Budget 2007-08
87%
13%
Revenue
Expenditure
Capital
Expenditure

12. Examples of Revenue and Capital Expenditure
Revenue Expenditure
 Govt. spends for building a
new Factory (increase in
assets)
 Govt. acquires 10 % shares of
a Public Ltd. Co. (increase in
assets)
 Central Govt. gives a loan to a
State Govt. (increase in
assets)
 Govt. repays the principal
amount of a loan taken from
ADB
(reduction of a liability)
Capital Expenditure
 Govt. pays the annual interest
due on a loan from IMF
(no effect on the size of the
original liability)
 Govt. expenditure on Food
Subsidy (no effect on assets/
liabilities)
 MHRD spends on Teachers’ Salary
under SSA
 MoHFW spends on procurement
of medicines under NRHM
 Central Govt. gives Grants to a
State and the State spends it to
build Schools (Centre won’t have
the ownership of Schools built!)
Mobilisation of Resources
Assume total expenditure in 2007-08 will be Rs 100, the central government will
have to raise Rs. 100 to meet out the expenditures
Sources of Government Income (Receipts)
1. Tax Revenue (Net)
(i.e. Gross Tax Revenue – States’ Share in Taxes, as per Finance
Commission recommendations)
2. Non Tax Revenue
 Interest Receipts
 Dividends & Profits from PSUs
 External Grants, and
 Services Charges recovered by Ministries
3. Non Debt Capital Receipts
 Recoveries of Loans and Advances
 Disinvestment Proceeds

13. Projections of receipts by Union Government in 2007-08
1. Net Tax Revenue Rs. 63
2. Non-Tax Revenue Rs. 13
Revenue Receipts (RR) Rs. 76
3. Non-debt Capital receipts RS. 0.5
Total Rs. 76.50
Total receipts projected by the Union government in 2007-08 is Rs. 76.50 and
expenditure is Rs. 100. Hence Rs. (100-76.50)=Rs. 23.5 will be raised through
borrowings and is called Debt
Deficit
Deficit is a Gap and the Govt. takes Debt to cover that gap.
Difference between Fiscal and Revenue Deficit
Fiscal Deficit
 Fiscal deficit (FD) of the Union
government is the gap between
its total expenditure (including
loans net of repayments) and its
sum total of non-debt creating
receipts.
 Fiscal deficit indicates the total
borrowing to be made by the
government in a particular year.
Example: In Union Budget
2007-08,
FD= Rs. 100-76.5= Rs. 23.5
Revenue Deficit
 Revenue deficit (RD) is the
gap between Revenue
Expenditure and Revenue
Receipts
Example: In Union Budget
2007-08,
RD= Rs. 87-Rs. 76=Rs. 11
Composition of receipts by the
Union governement
63
13
0.5
23.5
Net Tax Revenue
Non-Tax Revenue
Non-debt Capital
receipts
Debt

14. Where does the Govt. record its Receipts and Expenditures?
All receipts and expenditures of the government are shown in three separate
parts in the Budget, viz.
(1) Consolidated Fund,
(2) Contingency Fund and
(3) Public Account.
 Consolidated Fund: All revenues received by the Govt., all money received
by it in recovery of loans, and all loans raised by it constitute one
consolidated fund, called the Consolidated Fund of the India. The
government can take out money from the Consolidated Fund only if it gets
legislative approval to do so. This fund is created under Article 266(1) of
the Constitution of India.
 Contingency Fund: This Fund is of the nature of an imprest and enables
the Govt. to meet unforeseen expenditure. However, the fund needs to be
replenished and expenditure approvals are to be cleared at a later date by
the Parliament. Article 267 of the Indian Constitution empowers the
Parliament and the Legislature of a State to create a Contingency Fund for
India and the States; through the Contingency Fund of India Act, 1950.
 Public Account: Article 266 (2) of the Constitution of India states that all
other public money received by or on behalf of the Government of India shall
be credited to the Public Account of India. Receipts and disbursements, such
as deposits, reserve funds, remittances etc., which do not form part of the
‘Consolidated Fund’ are included in the Public Account. Money in this Account
is at the disposal of Govt., who acts merely as a banker or custodian of the
public money (e.g. Provident Funds, small savings, deposits and advances
etc). To make payments out of this account the approval of the Parliament is
not needed.

15. Budget Estimates, Revised Estimates and Actuals
In India, a fiscal (or financial) year starts on 1st of April and ends on the 31st of
March in the following year.
When Union Budget (say, for 2007-08) is prepared:
 All figures pertaining to the approaching fiscal year, i.e. 2007-08, are
Budget Estimates
 All figures pertaining to the current fiscal year (2006-07) are given both
as Budget Estimates (which gives the amount projected in the Budget
for 2006-07) and Revised Estimates (which the government prepares
based on the trends in receipts and expenditures over the first six to
seven months of the financial year 2006-07)
 And most of the figures for the last financial year, i.e. 2005-06, are
Actuals, not estimates.
DAY II
Session I
Documents of the Union Budget
(A) Non-technical documents in the Union Budget:
Budget Highlights
Presents the key expenditure and tax proposals made in the Budget.
Budget Speech
Speech delivered by the Finance Minister while placing the Budget before the
Parliament.
Budget at a Glance-
Provides a brief overview of almost all aspects of receipts and expenditures
contained in the Budget, at aggregate levels.
Implementation of Budget Announcements- Implementation of Budget
Announcement is a document indicating the status of implementation of the
proposals made in the previous year’s Budget.
(B) Technical documents in the Union Budget:
Annual Financial Statement –
Under Article 112 of the Constitution of India, a statement of estimated receipts
and expenditure of the Government of India has to be laid before Parliament in

16. respect of every financial year. This statement, titled Annual Financial Statement,
is the main Budget document. The Annual Financial Statement gives receipts and
expenditure of the government for three consecutive years. Details of actual
receipts and expenditures for the preceding year, revised estimates (RE) for the
current year, and the budget estimates (BE) for the ensuing financial year are
given in this document.
Finance Bill
Proposals in budget regarding the levy of new taxes, modifications in the existing
tax structure or continuance of existing tax rates for further period are presented
through the Finance Bill. The Finance Bill is presented to the Parliament
immediately after the presentation of the Budget.
Explanatory Memorandum to the Finance Bill
A memorandum explaining the provisions in the Finance Bill is also made
available.
Demands for Grants
Estimates of expenditure from the Consolidated Fund of India, which are
required to get legislative approval, are submitted in form of Demands for
Grants. The Demands for Grants are presented in the Lok Sabha along with the
Budget statements. Usually one Demand for Grant is presented in respect of
each Ministry or Department. However, in respect of large Ministries or
Departments more than one demand is presented.
Expenditure Budget (Vol. I and Vol. II)
Expenditure budget volume I gives revenue and capital expenditure of various
ministries and departments. The estimates are given under plan and non-plan
heads. The expenditure estimates for various ministries and departments are
given in detail in the Expenditure Budget volume II. The explanations given in
Demand for Grants for proposed expenditure under various
schemes/programmes are also included in this volume and, wherever needed,
brief reasons for the variations in the estimates are also given.
Receipts Budget
Receipts Budget provides estimated income (receipts) of the government in
detail. Estimates of receipts included in Annual Financial Statement are further
analyzed in Receipts Budget. It gives details of revenue receipts, capital receipts
and explains the estimates. Trends of receipts over the years and details of
External Assistance received are also included in this document.
Apart from the above mentioned documents, the following documents are now
being presented with the Budget every year, as the Fiscal Responsibility and
Budget Management Act requires the government to do so.

17.  The Macro Economic Framework Statement
 The Medium Term Fiscal Policy Statement
 The Fiscal Policy Strategy Statement
 The Statement under Section 7 of the FRBM Act
Understanding technical documents in the Budget
The expenditure proposals in the Budget are classified either on the basis of
Departments that will undertake the specific expenditures- for which there are
Demands numbers, or on the basis of specific services which are delivered
through a particular expenditure- for which there are Major Heads of account.
Demand Nos.:
The estimates of expenditure for various Ministries/Departments which need to
be voted by the Parliament are submitted in the form of demand for grants.
When a Ministry/Department is handling a number of different functions, a
separate demand for each of its major functions is submitted. Each demand for
grant shows the total amount required for a function during the year showing
revenue and capital expenditure separately.
The demands for grants are presented before the Lok Sabha along with the
Budget statement. An important technicality to be noted here is that under
Article 113 of the Constitution, no demand for grant (for any
Ministry/Department) can be submitted except on the recommendation of the
President. This means only the government can present a demand for grant and
not the private members. It is noteworthy that when a demand for grant is
presented, the Parliament can object to it, refuse it, reduce it, but cannot
increase it.
Examples from Union Budget
Demand No. Ministry/ Department
1 Department of Agriculture and Cooperation
55 Dept. of Elementary Education and Literacy
56 Dept. of Secondary and Higher Education
93 Ministry of Tribal Affairs

18. Major Heads:
Major heads are four digit codes, which have been allotted to specific services
delivered by the government- following distinct patterns for revenue receipts,
revenue expenditures, capital receipts and capital expenditures.
If the first digit of the major head is "0" or "1" the Head of Account will represent
Revenue Receipt , "2" or "3" will represent revenue expenditure, "4" or "5"
Capital Account, "6" or "7" Loan and Advances, and "8" or "9" Public account .
Examples:
0401 Crop Husbandry (Revenue Receipt)
2401 Crop Husbandry (Revenue Expenditure)
4401 Capital Outlay on Crop Husbandry (Capital Account)
6401 Loans for Crop Husbandry (Loan and advances account)
2210 Revenue account disbursement for Medical and Public Health
4210 Capital account disbursement for Medical and Public Health
6210 Loans for Medical and Public Health

19. “BUDGET SPEECH”
Speech of
P. Chidambaram
Minister of Finance
February 28, 2006
Mr. Speaker, Sir
It is my privilege to present the Budget for the year 2006-07.
1. AN OVERVIEW OF THE ECONOMY
2. Twenty months ago, when I presented the first Budget of
the UPA Government, I asked Honourable Members –
and the people of this country – to walk with us on the
path of honour and courage. The final report card on the
first of the UPA Government is out, and there are
reasons to celebrate. According to the Central Statistical
Organization (CSO), the growth in 2004-05 was 7.5 per
cent, with the manufacturing sector growing at 8.1 per
cent. More importantly, at current market prices, gross
domestic saving increased to 29.1 per cent of GDP and
the rate of gross capital formation increased to 30.1 per
cent of GDP.

20. “BUDGET HIGHLIGHTS”
FLAGSHIP PROGRAMMES
 Allocation for eight flagship programmes to increase by
43.2 per cent from Rs.34,927 crore in 2005-06 to
Rs.50,015 crore.
 North Eastern Region (NER): In addition 10 per cent of
the Plan Budget of each Ministry/Department to be
allocated for schemes and programmes in the North
Eastern Region (NER); for the flagship programmes
allocation of Rs.4,870 crore in 2006-07; total allocation for
NER is Rs.12,041 crore.
 Sarva Siksha Abhiyan: 93 per cent of children in age
group 6-14 years are in school, number of children not in
school has come down to about one crore; outlay to
increase from Rs.7,156 crore to Rs.10,041 crore in 2006-
07; 500,000 additional class rooms to be constructed and
150,000 more teachers to be appointed; Rs.8,746 crore to
be transferred to the Prarambhik Siksha Kosh from
revenues through education cess.
 Mid-day Meal Scheme: 12 crore children now covered;
allocation to be enhanced from Rs.3,010 crore to Rs.4,816
crore.

21. “BUDGET A GLANCE”
(In crore of Rupees)
2004-05 2005-06 2005-06 2006-07
Actuals Budget
Estimates
Revised
Estimates
Budget
Estimates
1 Revenue Receipts 306013 351200 348474 403465
2 Tax Revenue
(net to centre)
224798 273466 274139 327205
3 Non-Tax Revenue 81215 77734 74335 76260
4 Capital Receipts (5+6+7)$ 191669 163144 160231 160526
5 Recoveries of Loans 62043 12000 11700 8000
6 Other Receipts 4424 … 2356 3840
7 Borrowings and other
liabilities $
125202 151144 146175 148686
8 Total Receipts
(1+4)$
497682 514344 508705 563991
9 Non-Plan Expenditure 365406 370847 364914 391263
10 On Revenue Account of
which,
296857 330530 326142 344430
11 Interest Payments 126934 133945 130032 139823
12 On Capital Account 68549 40317 38772 46833
13 Plan Expenditure 132276 143497 143791 172728
14 On Revenue Account 87495 115982 114153 143762
15 On Capital Account 44781 27515 29638 28966
16 Total Expenditure (9+13) 497682 514344 508705 563991
17 Revenue Expenditure
(10+14)
384351 446512 440295 488192
18 Capital Expenditure
(12+15)
113331 67832 68410 75799
19 Revenue Deficit (17-1) 78338
(2.5)
95312
(2.7)
91821
(2.6)
84727
(2.1)
20 Fiscal Deficit {16-(1+5+6)} 125202
(4.0)
151144
(4.3)
146175
(4.1)
148686
(3.8)
21 Primary Deficit (20-11) -1732
-(0.1)
17199
(0.5)
16143
(0.5)
8863
(0.2)

22. “ANNUAL FINANCIAL STATEMENT:
REVENUE ACCOUNT RECEIPTS”
(In crore of Rupees)
Major
Head
Actuals
2004-05
Budget
2005-06
Revised
2005-06
Budget
2006-07
A TAX REVENUE
(a) Taxes on Income
and Expenditure
132024.21 176812.00 167073.00 206419.00
Corporation Tax 0020 82679.58 110573.00 103573.00 133010.00
Taxes on Income
other than
Corporation Tax
0021 49258.48 66239.00 63500.00 73409.00
Hotel Receipts Tax 0023 1.14 … … …
Interest Tax 0024 49.85 … … …
Other Taxes on
Income and
Expenditure
0028 35.16 … … …
(b) Taxes on Property
and Capital
Transactions:
736.95 265.00 3004.00 4265.00
Estate Duty 0031 0.20 … … …
Taxes on Wealth 0032 145.36 265.00 265.00 265.00
Gift Tax 0033 1.89 … … …
Securities
Transaction Tax
0034 589.50 … 2389.00 3500.00
Banking Cash
Transaction Tax
0036 … … 350.00 500.00

23. “FINANCE BILL”
AS INTRODUCED IN
LOK SABHA
ON 28TH
FEBRUARY, 2006
Bill No. 16 of 2006
THE FINANCE BILL, 2006
A
BILL
to give effect to the financial proposals of the Central Government
for the
financial year 2006-07.
BE it enacted by Parliament in the Fifty-seventh Year of the
Republic of India as follows:-
CHAPTER I
PRELIMINARY
1. (1) This Act may be called the Finance Act, 2006.
(2) Save as otherwise provided in this Act, sections 2 to 57 shall
be deemed to have come into force on the 1st
day of April 2006.
CHAPTER II
RATES OF INCOME –TAX
2. (1) Subject to the provisions of sub-sections (2) and (3), for the
assessment year commencing on the 1st
day of April, 2006,
income-tax shall be charged at the rates specified in Part I of
the First Scheduled and such tax as reduced by the rebate of
income-tax calculated under Chapter VIII-A of the Income-tax
Act, 1961 (hereinafter referred to as the Income-tax Act) shall
be increased by a surcharge for purposes of the Union
calculated in each case in the manner provided therein.
(2) In the cases of which Paragraph A of Part I of the First
Schedule applies, where the assessee has, in the previous year,

24. “MEMORANDUM”
FINANCE BILL, 2006
PROVISIONS RELATING TO DIRECT TAXES
The provisions in Finance Bill, 2006, in the sphere of direct
taxes relate to the following matters:-
(i) Prescribing the rates of income-tax on income liable to
tax for the assessment year 2006-07; the rates at which
tax will be deductible at source during the financial year
2006-07 from interest (including interest on securities),
winnings from lotteries or crossword puzzles, winnings
from horse races, card games and other categories of
income liable to deduction or collection of tax at source
under the income-tax Act; rates for computation of
“advance tax”, deduction of income-tax from or
payment of tax on ‘salaries’ and charging of income-tax
on current incomes in certain cases for the financial
year 2006-07.
(ii) Amendment of the Income-tax Act, inter-alia, to
rationalize and simplify the procedures, and widen the
tax base.
(iii) Amendment of the Wealth-tax Act to streamline the
assessment procedure.
2. Subject to certain exceptions, which have been
indicated while dealing with the relevant provisions,
the Bill follows the principle that changes in the provisions
of the tax laws, should ordinarily be made operative
prospectively in relation to the current incomes and not in
relation to the incomes of past years. The substance of
the main provisions in the Bill relating to direct taxes is
explained in the following paragraphs:-

25. RECEIPTS BUDGET
PART A
REVENUE RECEIPTS
The statement below summarises, by broad categories, the estimates of revenue
receipts for 2006-07. The estimates include the effect of Budget proposals. Further
details by sections and heads of account, together with brief notes explaining the
variation between the Budget and Revised Estimates, 2005-06 and between the
latter and the Budget Estimates for 2006-07, are given in the notes that follow this
Statement.
In accordance with the constitution (Eightieth Amendment) Act, 2000, which has
been given retrospective effect from 1.4.1998, all taxes referred to in the Union List,
except the duties and taxes referred to in Articles 268 and 269, respectively,
surcharge on taxes and duties referred to in Article 271 and any cess levied for
specific purpose under any law made by Parliament, shall be levied and collected by
the Government of India and shall be distributed between the Union and the States in
such manner as may be prescribed by the President on the recommendations of the
Finance Commission.
For the period 2005-2010, the manner of distribution between the Centre and the
States has been prescribed in Presidential Orders issued after considering the
recommendations of the Twelfth Finance Commission.
(In crore of Rupees)
Budget 2005-06 Revised 2005-06 Budget 2006-07
1 Tax Revenue
Corporation Tax 11573 103573 133010
Taxes on Income 66239 66239 77409
Wealth Tax 265 265 265
Customs 53182 64215 77066
Union Excise Duties 121533 112000 119000
Service Tax 17500 23000 34500
Taxes of Union Territories 733 849 903

27. “EXPENDITURE BUDGET- VOL II”
MINISTRY OF HUMAN RESOURCE DEVELOPMENT
DEMAND NO. 55
Department of Elementary Education and Literacy
A. The Budget allocations, net of recoveries, are given below:
(In crore of Rupees)
Major
Head
Budget 2005-2006 Revised 2005-2006 Budget 2006-2007
Plan Non
Plan
Total Plan Non
Plan
Total Plan Non
Plan
Total
Revenue 12531.76 4.77 12536.53 12531.86 4.65 12536.33 17128.0 4.71 17132.71
Capital … … … … … … … … …
Total 12531.76 4.77 12536.53 12531.86 4.65 12536.33 17128.0 4.71 17132.7
1 Secretariat-
Social Services
2251 … … … … … … … … …
General
Education
Elementary
Education
2 Strengthening
of Teachers
Training
Institutions
2202 1.00 … 1.00 1.00 … 1.00 1.00 … 1.00
2251 0.30 … 0.30 0.30 … 0.30 0.30 … 0.30
3601 169.70 … 169.70 172.70 … 172.70 154.70 … 154.70
3602 9.00 … 9.00 6.00 … 6.00 6.00 … 6.00

28. Total 180.00 … 180.00 180.00 … 180.00 162.00 … 162.00
3 Shiksha Karmi
Project in
Rajasthan
2202 6.50 … 6.50 6.50 … 6.50 … … …
4 Mahila
Samakhya
2202 29.85 … 29.85 23.85 … 23.85 29.85 … 29.85
2251 0.15 … 0.15 0.15 … 0.15 0.15 … 0.15
Total 30.00 … 30.00 24.00 … 24.00 30.00 … 30.00
5 National Bal
Bhawan, New
Delhi
2202 4.50 2.53 7.03 4.50 2.53 7.03 5.40 2.61 8.01
6 District Primary
Education
Programme
(EAP)
2202 597.91 … 597.91 597.91 … 597.91 197.91 … 197.91
2251 2.09 … 2.09 2.09 … 2.09 2.09 … 2.09
Total 600.00 … 600.00 600.00 … 600.00 200.00 … 200.00
7 Nutritional
Support to
Primary
Education
(MDM)
2202 1164.70 … 1164.70 1164.70 … 1164.70 463.39 … 463.39
2251 … … … … … … 10.50 … 10.50
3601 1825.07 … 1825.07 1825.07 … 1825.07 1391.61 … 1391.61
3602 20.99 … 20.99 20.99 … 20.99 32.70 … 32.70
Total 3010.76 … 3010.76 3010.76 … 3010.76 1898.20 … 1898.20
8 Sarva Shiksha
Abhiyan (SSA)
2202 7129.53 … 7129.53 7139.78 … 7139.58 4210.68 … 4210.68
2251 26.45 … 26.45 26.45 … 26.45 … … …
3601 0.01 … 0.01 0.01 … 0.01 0.01 … 0.01
3602

29. Total 7156.00 … 7156.00 7166.25 … 7166.25 4210.70 … 4210.70
9 Transfer to
Prarambhik
Shiksha Kosh
(PSK)
2202 … … … … … … 8746.00 … 8746.00
10 Schemes
financed from
Prarambhik
Shiksha Kosh
(PSK)
10.1 Nutritional
Support to
Primary
Education
(MDM)
2202 … … … … … … 729.00 … 729.00
2251 … … … … … … … … …
3601 … … … … … … 2186.00 … 2186.00
3602 … … … … … … … … …
Total … … … … … … 2915.00 … 2915.00
10.2 Sarva Shiksha
Abhiyan (SSA)
2202 … … … … … … 5831.00 … 5831.00
2251 … … … … … … … … …
3601 … … … … … … … … …
3602 … … … … … … … … …
Total … … … … … … 5831.00 … 5831.00
11 Amount met
from
Prarambhik
Shiksha (PSK)
2202 … … … … … … -6560.00 … 6560.00
2251 … … … … … … … … …
3601 … … … … … … -2186.00 … 2186.00

30. 3602 … … … … … … … … …
Total … … … … … … -8746.00 … 8746.00
12 National
Council of
Teacher
Education
2202 4.50 … 4.50 0.25 … 0.25 0.45 … 0.45
13 Kasturba
Gandhi Balika
Vidayalaya
2202 225.00 … 225.00 225.00 … 225.00 115.20 … 115.20
3601 … … … … … … … … …
3602 … … … … … … … … …
Total 225.00 … 225.00 225.00 … 225.00 115.20 … 115.20
Lumpsum
Provisions for
the Benefit of
North Eastern
Region and
Sikkim
…. …. …. …. …. ….
Total
Elementary
Education
11217.3 2.5 11219.8 11217.3 2.5 11219.8 15367.9 2.6 15370.6

31. Session:
Union and State Budgets from the lens of Children
Children constitute about 42% of the total population of the country and often ignored and neglected group.
All kind of public expenditure, meant for development of a community, can be expected to have some
benefits for children as well. There exists a strong case for identifying that part of public expenditure which
is meant specifically for addressing the needs of children; in other words segregating those
programmes/schemes from all kinds of developmental programmes/schemes, which are specifically meant
for addressing the needs of children.
Motivation for Child Budget Analysis
 Governments prioritise between sectors/ departments/ objectives while spending money;
 Analysis of government budgets can reveal such priorities and also explain to a significant extent the
progress across sectors/ departments/ objectives;
 Analysis of budget documents of the government can inform us about financial constraints in achieving
desired policy goals;
 Examining budgetary processes (e.g. flow of funds) can also identify non-financial constraints in
achieving desired outcomes from outlays.
 Pressing need for Child Budget Analysis and Advocacy in India.
Ministries/ Departments undertaking child-specific programmes(in the Central Government):
• Elementary Education & Literacy
• Secondary Education & Higher Education
• Women & Child Development

32. • Health & Family Welfare
• Social Justice & Empowerment
• Tribal Affairs
• Youth Affairs & Sports
• Labour & Employment
• Rural Development
•
Expenditures by these Ministries/ Departments grouped into the four categories of:
(a) Early Childhood Care & Development;
(b) Child Health;
(c) Child Education; and
(d) Child Protection
Analysis of Union Budget :
1. Total Allocations (%) for Child Specific Schemes in Union Budget as a
proportion of Total Expenditure of Union Government

33. 2.11 2.05 2.2 2.54
4.17
4.86
0
2
4
6
8
10
12
14
16
18
20
2001-
02 (RE)
2002-
03 (RE)
2003-
04 (RE)
2004-
05 (RE)
2005-
06 (RE)
2006-
07 (BE)
Year
ChildBudgetas%ofTotalUnionBudget

34. 2. Sectoral Composition of the Total Outlay for Children in Union Budget in 2001-02 (BE)
Child Protection
1%
Child Health
13%
Child Education
66%
Early Childhood
Care and
Development 20%

35. Concerns:
 Magnitude of child budget in the Union Budgets has been very low, in comparison to the needs
of children in the country.
 This magnitude has improved in 2005-06 and 2006-07
 Growth in the magnitude of child budget at the level of Central Government has been mainly due to
increases in spending on elementary education (mainly, SSA) and (to a smaller extent) due to increases
in spending on ICDS.
 Child Education gets a very large chunk of allocations within total child budget in the Union Budget.
 Child Health and Protection of Children in difficult circumstances are most neglected in the Union
Budget.
Analysis of State Budget of Some States
SN. State Outlays from
the State
Budget on
Child-Specific
schemes
(approx.)
Allocation (%) as a
percentage of total
outlay
1 Rajasthan Rs. 1760 16.4
2 Uttar Pradesh Rs. 1460 14.7
3 West Bengal Rs. 1170 13.3

36. Gender Issues and Union Budget
The way in which national budgets in most countries are formulated, ignores the different, socially
determined roles, responsibilities and capabilities of men and women. Gender sensitive budget analysis is
needed to examine whether resources have been budgeted to implement a country’s commitment to
improving the status of women
Gender Budgets are NOT:
 A separate budget for women
 About spending the same on women and men
 Just about assessing programmes targeted specifically at Women and girls.
Gender budgets are:
 A policy framework,
 A methodology and a set of tools to assist governments to integrate gender perspective into budget,
 Seek to expose assumptions of ‘gender neutrality’ within all economic policy raising awareness that
budgets will impact differently on women and men because of the different social and economic
positioning.
Evolution of Gender Budgeting in India
Seventh Plan (1985-90)

37.  Declared as its objective, “to bring women into the mainstream of
national development”
 1985- Ministry of Human Resource Development set up DWCD
 27 major women specific schemes and DWCD entrusted the task of monitoring their impact on
women– genesis of GB
Eighth Plan (1992-97)
 Paradigm shift– from development to empowerment of women
 For the first time highlighted the need to ensure a definite flow of funds from general developmental
sectors to women
 It commented:“ …benefits should not bypass women and special programmes on women should
complement the general development programmes. The latter in turn should reflect greater gender
sensitivity”
Ninth Plan (1997-2002)
 Stated Empowerment of Women as strategic obj
 Women’s Component Plan- 30% of funds were sought to be ear-marked in all “women related”
sectors
Tenth Plan (2002-2007)
 Aims at initiating immediate action in tying up the two effective concepts of Women Component Plan and
Gender Budgeting to play a complementary role to each other.

38. Initiatives by the Women & Child Department
Issued Checklists / Guidelines for gender audit of public expenditure, consultations etc
Framework
a. Quantification of allocation of resources for women
b. Gender Audit of policies of the Government
c. Impact assessment of various schemes in the Union and State budgets
d. Analyzing policies for their impact on status of women as reflected in Macro
Indicators
e. Institutionalizing the generation and collection of gender dis-aggregated data
f. Consultations and Capacity building
g. Promote gender equity in participation in decision making
h. Formulation of Satellite accounts
Gender Budgeting Statements in the Union Budget Documents
Year No. of
Demands
Years Total magnitude of
Gender Budgeting
GB Statement
presented in 2005-06
10 2005-06
BE
Rs. 14,378.68 Crore
(4.74%*)

39. GB Statement
presented in 2006-07
24 2005-06
RE
Rs. 24,240.51 Crore
(4.77%*)
24 2006-07
BE
Rs. 28,736.53 Crore
(5.10%*)
GB Statement
presented in 2007-08
33 2006-07
RE
Rs. 22,251.41 Crore
(3.8%*)
33 2007-08
BE
Rs. 31,177.96 Crore
(4.8%*)
Gender Budgeting from the lens of most marginalised women,
2007-08 BE
Most
marginalise
d Women
7%
Other
Women
93%

40. Session
Budget making as a Political Process
Budget Cycle
Formulation
Enactment
Execution
Audit

41. Formulation:
The Executive branch puts together the budget plan by taking into account the broad contours of economic
growth, inflation and demographic factors that may influence the accounts. Such task is usually taken care of
by the Budget Division of the Ministry of Finance. Ministry of finance seeks the relevant information and
demands from different individual departments and other ministries
Enactment
The legislative branch of the government enacts the budget by approving it after a thorough debate in the
parliament. It is a cardinal principle that no taxation can be levied and no expenditure incurred, without the
prior approval of the Parliament. The journey of the budget through Parliament is the vital part of the
process. In parliament, it goes through the following stages:
1. Presentation to the Legislature
2. General Discussion
3. Voting of Demand for Grants
4. Consideration and passing of the taxation proposals, that is, the Finance Bill
Execution
The government is responsible for the execution of the enacted budget. Often, budgets are not always
implemented in the same form and manner they were approved. Sometimes, unexpected changes in receipts
and sometimes the unexpected changes in the priorities make a case for changing the practical
implementation procedure from the enacted ones.
Audit
This is the final stage of a budget cycle. It includes a number of activities that measures the extent to which
the public resources are properly and effectively utilized. It is an integral part of the financial management
system and ensures the best possible use of the public resources. At this stage, the performance is the
judging parameter of the budgets. The Comptrller and Auditor General (CAG) of India audits government
departments and the CAG reports are placed before the parliament and scrutinized by the Public Account
Committee.

42. Budget making Process
Income Plan
August-September October November December December January February
March
Finalisation Consultation
Spending
Demands
of
Grants
Union
Cabinet
Finance
Ministry
Union
Cabinet
Prime
Minister
Finance
Minister
Presentation
of budget Parliament
Line
Ministries
Treasury
Ministers
Planning Commission

43. Who influences our budget?
Constitutional
Actors
Non-Constitutional
Actors
Government
Actors
Non-Govt. Actors
Executive Members of
Parliament and
Committees
Within the
Parliament
Finance
Commission/
Constitutional
Commissions/
Committees
Planning
Commission
Bureaucracy
Reserve Bank
Govt. funded
Research
Institutions
Civil Society
Organisations
Individuals-
Industrialists (in
groups or anyone)
Rich farmers
Lobby
Industrial Lobby-
CII, FICCI,
ASSOCHAM etc.
Media
External Political Economy/Institions-IMF, World Bank, ADB

44. Civil Society Engagement in Budget Analysis
Budget Formulation
Performance Monitoring Civil Society Budget Review
Budget Tracking

45. Budget as a Tool for Advocacy
Rich/powerful people are very close to the resources and have control
over resources where as Marginalised and poor people are very far off.
They have very limited or no access to resources. Here comes the need
for Budget advocacy.
Budget analysis is very important to scrutinize the Government Budgets
from any perspective and mere analysis of the Budgets alone cannot
influence the policy making unless it is supported by proper public
action or advocacy to promote the findings in public forums so as to
influence the common mindset.
Budget analysis is an advocacy tool for developing public understanding
on policy priorities of the Government. This would eventually empower
the people to seek Governments’ accountability.
This process would provide us a large operative space that is
unexplored to tactfully engage with the State, and this alternative
mechanism using democratic space goes beyond traditional means of
public activism.
For effective Budget advocacy one should have complete
information/knowledge on the Budget which can be acquired through
Resources/
Rights
Rich/
Powerful
Middleclass
Marginalised

46. study/analysis and experiences. Information/knowledge empowers
people with the right to question, right to examine, right to audit, right
to assess, etc.
Strategizing Budget Analysis
Strategy is a clear path from where you are to where you want to be
Building blocks of strategy
 Where are you now?
 Where do you want to get to?
 How will you get from one to the other?
 The more specific the better
Key components:
Objectives: place where we want to get to
Audience: who can make the change that you want
Primary audiences: those who have the actual formal
authority to deliver the goods
Secondary audiences: those that influence the primary
audiences (media, key political constituencies, etc.)
Message: What the audiences need to hear to convince them
Messengers: Whom do they need to hear it from?
 Experts
 Key constituencies
 Political power
 Authentic voices
Actions
 How can we get the message delivered
 Convincing decision makers, media advocacy, public education,
protests, jansunwais, etc.
 The best actions are those requiring the least effort and have the
least negative consequences, BUT which still gets the job done