Budget process - Indian Public Finance, Public finance Video Lecture | Public Finance - B Com

hello friends welcome to tricks beyond
that every year government presents the
annual financial statement or the budget
in the lokes of how in the month of
February the last working day not only
for exams but also as a concerned
citizen it is very important to
understand how a budget is prepared and
how it is passed in the parliament
though it is a very complex process but
through this video I have tried to make
it very simple for you first of all I
will explain you how budget is prepared
and then in the next video I will
explain how budget is passed in the
parliament so let's begin
first of all what a budget consists of
it consists of first estimates of
revenue in capital receives don't worry
I will explain the difference between
revenue in capitalism I will explain
what is the revenue incapable recipe
second it consists of ways and means to
raise the revenue third estimates of
expenditure put details of actual
receives in expenditure and the reason
if there is any surplus or deficit and
fifth the economic and financial policy
of the coming here any other taxation
policy etc to understand this to make it
simple the example of your own house
what do you do when you make your own
budget firstly you estimate what money
you have what money you are getting then
you take into consideration what are the
ways and means to raise those revenue
which means how you are going to get
that money either from your salary or
your business or you have invested
somewhere or you are going to borrow or
you're going to sell these all things
are ways and means to raise the revenue
similarly government also first
estimates its revenue in capital
received and then ways and means to
raise those revenue raise those revenue
through taxation or through borrowings
etc etc then you make estimates of
expenditure how much you gonna spend in
the month government also estimates how
much it is going to spend in the ear
then details of actual
it's an expenditure the estimates always
vary from the actual receives and
expenditure so the budget comes also
consist of the details of actual
receives in this vintage er for the
previous year and then economic and
financial policy of the coming year
these all are included in the budget
before I explain you how a budget is
made let me explain you what is a
revenue and capital receive or what our
budget receives under budget recipie
have revenue received and capital
received revenue received consists of
tax revenue and none tax revenue again
tax revenue gets divided into direct tax
and indirect tax none tax revenue
consists of such as license fees term
fee interest payment etc these all
consist of non tax revenue and the basic
difference between revenue received in
capital received is that the revenue
receive does not create any liability no
liability is created by revenue received
while capital receives create liability
for example when government borrows it
creates liability so this was them the
budget making process starts in August
and September which means for this
year's budget the process already
started back in August September 2015
there is a budget division called
there is a budget division in Ministry
of Finance which is Department of
Economic Affairs this division is
responsible for budget making the dis
Department of Economic Affairs since a
budget circular this budget circular
consists of all the instruction
informants according to which all the
ministries and departments has to send
their estimated expenditure and the sips
of the year the ministries and
Department need to send three kinds of
figure these three figures are
estimated budget or budget estimates
budget estimates then revised estimates
and actual the budget estimates consist
of the expenditure and recipt
of the coming year
all the department ministries sent to
the ministry what they need for the
coming year those figures are included
in budget estimates revised estimate is
for the current here for this revised
estimate government need not to seek
approval from the Parliament it is for
the reallocation of the fund on the
basis of implementation in the first
half of the year and this actual which
means and the figures included in the
actual which consists of actual
expenditure and received it is for the
previous year which means budget
instigates is for 2016-17 for this
year's budget revised estimate is for
2015-16 1516 sorry 2015 16 and actuals
are for 2014-15 this is how these three
figures are sent to the ministry which
means that the Union budget of 2016-17
will contain budget estimates of 2016-17
device instamate of 2015-16 and actual
estimates
actual budget of 2014-15 one thing
important to note is that when there was
Planning Commission it played a very
important role because the ministries
would provide budget estimates for the
next financial year Valley after they
have discussed their respective plan
schemes with the central planning
commission
and the central planning commission
after consultation with the Ministry of
Finance would arrive at the size of the
annual plan and the gross budgetary
support that would be provided to the
respective plans and since Planning
Commission now have been dismantled and
now we have nathie IO in place of that
it is yet to see what role does
neethiyin will play also in the final
stage the revenue earning ministries
provide their estimates of their revenue
receipts for the current ian's which is
revised estimates and budget estimates
which is for the next year or next
fiscal finally the Finance Minister
examines the budget proposals prepared
by the Ministry and makes change changes
in them if required then Finance
Minister consoles the Prime Minister and
also briefs the Union Cabinet about the
budget at this stage and if there is any
conflict between any ministry and the
finance ministry with regard to the
budget the matter is supposed to be
resolved by the Cabinet after this the
budget division of the Finance Ministry
which is Department of Economic Affairs
it consolidates all figures which is to
be presented in the budget and prepares
the final budget outcome the national
informatics centres and I see helps the
budget division in the process of
consolidation of the budget data which
has been fully computerized at the end
of this process the Finance Minister
takes the permission of the President of
India for presenting the Union budget to
Parliament so this was the process of
budget making in the next video I will
explain how the budget is passed in the
parliament hope you understood the
process I have not provided the details
which are not important for exams for
example offices of DEA are quarantined
when the budget is made how high level
of secrecy is maintained these all are
not important with respect to exam I
will if I will get time I will try to
explain these things also in the next
video I will explain
how a budget is passed in the parliament
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