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Page 1 Budgeting (Economy) Visit our website www.sleepyclasses.com or our YouTube channel for entire GS Course FREE of cost Also Available: Prelims Crash Course || Prelims T est Series Page 2 Budgeting (Economy) Visit our website www.sleepyclasses.com or our YouTube channel for entire GS Course FREE of cost Also Available: Prelims Crash Course || Prelims T est Series 1. Preparing of Budget 1 ......................................................................................... Pros 1 ............................................................................................................................................ Cons 1 ........................................................................................................................................... Zero Based Budgeting 1 ........................................................................................................... Golden rule of public ?nance 1 .............................................................................................. 2. How to Implement Participatory Budgetry? 1 .......................................... 3. FRBM 2 ..................................................................................................................... Objectives 2 ................................................................................................................................ Provision 2 ................................................................................................................................... Amendments 2 ........................................................................................................................... Criticism of FRBM 2 ................................................................................................................. 4. Transparency in Budgetary Process 3 .......................................................... What could be done 3 .............................................................................................................. Challenges 3 ............................................................................................................................... 5. Railway Budget Merger 3 .................................................................................. Positives 3 ................................................................................................................................... Negatives 4 ................................................................................................................................. 6. Gender Budgeting 4 ............................................................................................. Objective 4 .................................................................................................................................. Components 4 ............................................................................................................................ Problem 4 .................................................................................................................................... Various types of de?cits and speci?c steps required to curb them 4 ........................... Implications 4 ............................................................................................................................. Gov. Budgeting 5 ....................................................................................................................... 7. Inclusive Budgeting/Participatory Budgeting 5 ....................................... 8. 15th Finance Commission 5 ............................................................................. Composition 5 ............................................................................................................................ 9. T erms of Reference of 15th Finance Commission 6 ............................... www.YouTube.com/SleepyClasses www.SleepyClasses.com T able of Contents Page 3 Budgeting (Economy) Visit our website www.sleepyclasses.com or our YouTube channel for entire GS Course FREE of cost Also Available: Prelims Crash Course || Prelims T est Series 1. Preparing of Budget 1 ......................................................................................... Pros 1 ............................................................................................................................................ Cons 1 ........................................................................................................................................... Zero Based Budgeting 1 ........................................................................................................... Golden rule of public ?nance 1 .............................................................................................. 2. How to Implement Participatory Budgetry? 1 .......................................... 3. FRBM 2 ..................................................................................................................... Objectives 2 ................................................................................................................................ Provision 2 ................................................................................................................................... Amendments 2 ........................................................................................................................... Criticism of FRBM 2 ................................................................................................................. 4. Transparency in Budgetary Process 3 .......................................................... What could be done 3 .............................................................................................................. Challenges 3 ............................................................................................................................... 5. Railway Budget Merger 3 .................................................................................. Positives 3 ................................................................................................................................... Negatives 4 ................................................................................................................................. 6. Gender Budgeting 4 ............................................................................................. Objective 4 .................................................................................................................................. Components 4 ............................................................................................................................ Problem 4 .................................................................................................................................... Various types of de?cits and speci?c steps required to curb them 4 ........................... Implications 4 ............................................................................................................................. Gov. Budgeting 5 ....................................................................................................................... 7. Inclusive Budgeting/Participatory Budgeting 5 ....................................... 8. 15th Finance Commission 5 ............................................................................. Composition 5 ............................................................................................................................ 9. T erms of Reference of 15th Finance Commission 6 ............................... www.YouTube.com/SleepyClasses www.SleepyClasses.com T able of Contents 1. Preparing of Budget Pros • Speedier Implementation of schemes. • Help companies and households to ?nalise their savings investments and tax plans. • Parliamentary approval of ?nal batch of supplementary demands and re – appropriation relating to current ?nancial year may be feasible a few weeks before the end of the ?nancial year. • State government will get more time to actually utilise the funds Cons • Political Motives Zero Based Budgeting • Allocation of Resources to agencies based on periodic revaluation by those agencies of the need for the entire programme. • Other words an agency reassess what it is doing from top to bottom from a hypothetical zero bases. Golden rule of public ?nance A government should borrow money only to invest and to ?nance current spending. • Balanced Budget: T otal Public Expenditure equals T otal Govt Income • Gender Budgeting: funds and Responsibilities allocated on basis of gender. • Outcome and Performance Budget: Quantative as well as Qualitative Progress reports of Performance. • Outcome B: Micro Level • Performance B: Macro Level 2. How to Implement Participatory Budgetry? 1. Citizens Engagement Meeting 2. Proposition of Ideas etc. 3. Selection 4. Voting 5. Consensus 6. Approval 7. Implementation 8. Monitoring www.YouTube.com/SleepyClasses www.SleepyClasses.com 1 Page 4 Budgeting (Economy) Visit our website www.sleepyclasses.com or our YouTube channel for entire GS Course FREE of cost Also Available: Prelims Crash Course || Prelims T est Series 1. Preparing of Budget 1 ......................................................................................... Pros 1 ............................................................................................................................................ Cons 1 ........................................................................................................................................... Zero Based Budgeting 1 ........................................................................................................... Golden rule of public ?nance 1 .............................................................................................. 2. How to Implement Participatory Budgetry? 1 .......................................... 3. FRBM 2 ..................................................................................................................... Objectives 2 ................................................................................................................................ Provision 2 ................................................................................................................................... Amendments 2 ........................................................................................................................... Criticism of FRBM 2 ................................................................................................................. 4. Transparency in Budgetary Process 3 .......................................................... What could be done 3 .............................................................................................................. Challenges 3 ............................................................................................................................... 5. Railway Budget Merger 3 .................................................................................. Positives 3 ................................................................................................................................... Negatives 4 ................................................................................................................................. 6. Gender Budgeting 4 ............................................................................................. Objective 4 .................................................................................................................................. Components 4 ............................................................................................................................ Problem 4 .................................................................................................................................... Various types of de?cits and speci?c steps required to curb them 4 ........................... Implications 4 ............................................................................................................................. Gov. Budgeting 5 ....................................................................................................................... 7. Inclusive Budgeting/Participatory Budgeting 5 ....................................... 8. 15th Finance Commission 5 ............................................................................. Composition 5 ............................................................................................................................ 9. T erms of Reference of 15th Finance Commission 6 ............................... www.YouTube.com/SleepyClasses www.SleepyClasses.com T able of Contents 1. Preparing of Budget Pros • Speedier Implementation of schemes. • Help companies and households to ?nalise their savings investments and tax plans. • Parliamentary approval of ?nal batch of supplementary demands and re – appropriation relating to current ?nancial year may be feasible a few weeks before the end of the ?nancial year. • State government will get more time to actually utilise the funds Cons • Political Motives Zero Based Budgeting • Allocation of Resources to agencies based on periodic revaluation by those agencies of the need for the entire programme. • Other words an agency reassess what it is doing from top to bottom from a hypothetical zero bases. Golden rule of public ?nance A government should borrow money only to invest and to ?nance current spending. • Balanced Budget: T otal Public Expenditure equals T otal Govt Income • Gender Budgeting: funds and Responsibilities allocated on basis of gender. • Outcome and Performance Budget: Quantative as well as Qualitative Progress reports of Performance. • Outcome B: Micro Level • Performance B: Macro Level 2. How to Implement Participatory Budgetry? 1. Citizens Engagement Meeting 2. Proposition of Ideas etc. 3. Selection 4. Voting 5. Consensus 6. Approval 7. Implementation 8. Monitoring www.YouTube.com/SleepyClasses www.SleepyClasses.com 1 3. FRBM Fiscal responsibility and Budgetary Management act, 2003. (from various sources compiled) Objectives • T o institutionalise ?scal discipline • T o ensure transparency and inter generational equity in ?scal management • T o ensure long term macroeconomic stability • T o ensure coordination between monetary and ?scal policy. Provision • T o eliminate revenue de?cit by2008-2009 • T o reduce ?scal de?cit 3% of GDP by 2008-2009 • The government can move away from the path of ?scal consolidation in case of 1. Natural calamities 2. National security 3. Other speci?c ground that government may specify • Due to global ?nancial crisis, FRBM was suspended and ?scal consolidation was put on hold in 2007-2008(because Government had to adopt expansionary ?scal policy) Amendments • Finance act, 2012 – concept of ERD was introduced • Medium term expenditure framework was introduced • Eliminate ERD by 31st march,2105 and achieve RD of not greater than 2% of GDP by the same date. Criticism of FRBM • There is no penalty for non- compliance • No targets have been set for long term • It is easily amendable • It does not talk about or there is no focus on revenue side of the budget. • Since it might require the government to cut back on social expenditure necessary to create productive assets and general upliftment of rural poor of India. • The vagaries of monsoon in India, the social dependence on agriculture and over-optimistic projections of the task force in-charge of developing the targets were highlighted as some of the potential failure points of the Act. However, other viewpoints insisted that the act would bene?t the country by maintaining stable in?ation rates which in turn would promote social progress. www.YouTube.com/SleepyClasses www.SleepyClasses.com 2 Page 5 Budgeting (Economy) Visit our website www.sleepyclasses.com or our YouTube channel for entire GS Course FREE of cost Also Available: Prelims Crash Course || Prelims T est Series 1. Preparing of Budget 1 ......................................................................................... Pros 1 ............................................................................................................................................ Cons 1 ........................................................................................................................................... Zero Based Budgeting 1 ........................................................................................................... Golden rule of public ?nance 1 .............................................................................................. 2. How to Implement Participatory Budgetry? 1 .......................................... 3. FRBM 2 ..................................................................................................................... Objectives 2 ................................................................................................................................ Provision 2 ................................................................................................................................... Amendments 2 ........................................................................................................................... Criticism of FRBM 2 ................................................................................................................. 4. Transparency in Budgetary Process 3 .......................................................... What could be done 3 .............................................................................................................. Challenges 3 ............................................................................................................................... 5. Railway Budget Merger 3 .................................................................................. Positives 3 ................................................................................................................................... Negatives 4 ................................................................................................................................. 6. Gender Budgeting 4 ............................................................................................. Objective 4 .................................................................................................................................. Components 4 ............................................................................................................................ Problem 4 .................................................................................................................................... Various types of de?cits and speci?c steps required to curb them 4 ........................... Implications 4 ............................................................................................................................. Gov. Budgeting 5 ....................................................................................................................... 7. Inclusive Budgeting/Participatory Budgeting 5 ....................................... 8. 15th Finance Commission 5 ............................................................................. Composition 5 ............................................................................................................................ 9. T erms of Reference of 15th Finance Commission 6 ............................... www.YouTube.com/SleepyClasses www.SleepyClasses.com T able of Contents 1. Preparing of Budget Pros • Speedier Implementation of schemes. • Help companies and households to ?nalise their savings investments and tax plans. • Parliamentary approval of ?nal batch of supplementary demands and re – appropriation relating to current ?nancial year may be feasible a few weeks before the end of the ?nancial year. • State government will get more time to actually utilise the funds Cons • Political Motives Zero Based Budgeting • Allocation of Resources to agencies based on periodic revaluation by those agencies of the need for the entire programme. • Other words an agency reassess what it is doing from top to bottom from a hypothetical zero bases. Golden rule of public ?nance A government should borrow money only to invest and to ?nance current spending. • Balanced Budget: T otal Public Expenditure equals T otal Govt Income • Gender Budgeting: funds and Responsibilities allocated on basis of gender. • Outcome and Performance Budget: Quantative as well as Qualitative Progress reports of Performance. • Outcome B: Micro Level • Performance B: Macro Level 2. How to Implement Participatory Budgetry? 1. Citizens Engagement Meeting 2. Proposition of Ideas etc. 3. Selection 4. Voting 5. Consensus 6. Approval 7. Implementation 8. Monitoring www.YouTube.com/SleepyClasses www.SleepyClasses.com 1 3. FRBM Fiscal responsibility and Budgetary Management act, 2003. (from various sources compiled) Objectives • T o institutionalise ?scal discipline • T o ensure transparency and inter generational equity in ?scal management • T o ensure long term macroeconomic stability • T o ensure coordination between monetary and ?scal policy. Provision • T o eliminate revenue de?cit by2008-2009 • T o reduce ?scal de?cit 3% of GDP by 2008-2009 • The government can move away from the path of ?scal consolidation in case of 1. Natural calamities 2. National security 3. Other speci?c ground that government may specify • Due to global ?nancial crisis, FRBM was suspended and ?scal consolidation was put on hold in 2007-2008(because Government had to adopt expansionary ?scal policy) Amendments • Finance act, 2012 – concept of ERD was introduced • Medium term expenditure framework was introduced • Eliminate ERD by 31st march,2105 and achieve RD of not greater than 2% of GDP by the same date. Criticism of FRBM • There is no penalty for non- compliance • No targets have been set for long term • It is easily amendable • It does not talk about or there is no focus on revenue side of the budget. • Since it might require the government to cut back on social expenditure necessary to create productive assets and general upliftment of rural poor of India. • The vagaries of monsoon in India, the social dependence on agriculture and over-optimistic projections of the task force in-charge of developing the targets were highlighted as some of the potential failure points of the Act. However, other viewpoints insisted that the act would bene?t the country by maintaining stable in?ation rates which in turn would promote social progress. www.YouTube.com/SleepyClasses www.SleepyClasses.com 2 • Some others have drawn parallel to this act's international counterparts like the Gramm-Rudman- Hollings Act (US) and the Growth and Stability Pact (EU) to point out the futility of enacting laws whose relevance and implementation over time is bound to decrease. • Recently the Government has constituted N.K Singh committee to review the FRBM act. 4. Transparency in Budgetary Process What could be done • Reports Ranging from pre-budget to monthly mid-term yearly reports submitted to parliament for discussion. • Dis-closures of major assumptions on budget estimates calculations. • Accoun6ng: Uniform Accounting practices & internal audits for assuring authentication of data. • Views of opposi6on: could be involved for including diverse views. • Elici6ng public opinion in pre- budget interactions • Independent Fiscal Council: as envisaged in 14th FC could be formed (away from populism) • A pre-review commiAee like PAC to examine budget before it is presented for checking authenticity of data, NITI’s help could be welcome here. Challenges • Pre-review might delay the budgetary process • Already burdened Parliament might not be able to scrutinise various reports submitted • Low awareness level of people to participate in budget making. 5. Railway Budget Merger Positives 1. Saving on annual dividend to govt on gross budgetary support. 2. Ending the “populist exercise” that it had become. 3. Increased focus on ?nancial performance 4. Getting rid of colonial Legacy 5. Better prospects of centre state cooperation 6. 7th Pay Commission burden may be shaved by ?nmin. 7. Separate budget requires resources & manpower, could be saved. 8. Easier to issue bonds www.YouTube.com/SleepyClasses www.SleepyClasses.com 3Read More
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