Finance Minister Nirmala Sitharaman, India's first full-time woman finance minister, will present the re-elected NDA government's first full-year budget in February 2020. As an annual statement of government finances, a budget provides a detailed account of the state's revenues and spending in the past year and offers estimated collections, expenditure and projections for the year ahead. The budget document for financial year 2019-20, for example, will compare the estimates given earlier with the actual expenditure - known as 'Actuals' and provide forward-looking figures for the year ahead.
Budget documents are divided into many categories, including a copy of the Budget speech delivered in lower house of parliament by the Finance Minister. Here's a lowdown about the Budget documents.
Budget documents are broadly categorized into eight parts:
- Annual Financial Statement (AFS)
- Demands for Grants (DG)
- Finance Bill
- Statements mandated under FRBM Act:
- Macroeconomic Framework Statement
- Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement
- Expenditure Budget
- Receipt Budget
- Expenditure Profile
- Budget at a Glance
Here's a brief description of what to expect in these Budget documents:
Annual Financial Statement (AFS)
The annual financial statement - also known as the budget statement - details the estimated receipts and expenditure in the ongoing financial year (which ends in the March following the presentation of Budget). These estimates are known as Revised Estimates (RE). The annual financial statement also gives projections for the coming year; these are known as Budget Estimates (BE). Besides, it also contains Actuals, which are the actual figures of the previous financial year.
Demands for Grants (DG)
Demands for Grants detail the requirements of different ministries or departments under the central government. The government is required to provide details of estimated expenditure. For example, a Demand for Grant for the power ministry details the money spend in the previous financial year (Actuals), compares the Budget Estimates for the ongoing financial year with the estimates given in previous Budget, and speaks about the Budget Estimates for the next financial year.
More than one demand may be presented for a ministry or department depending on the nature of expenditure.
A government submits its proposals - in terms of imposition, abolition, remission, alteration or regulation of taxes - to Parliament through this document. This document also contains any other provisions relating to the Budget that could be classified as Money Bill.
Macroeconomic Framework Statement
The Macroeconomic Framework Statement contains an assessment of growth prospects of the economy and a statement of specific underlying assumptions. It also contains an assessment regarding the GDP growth rate, the domestic economy and stability of the external economic environment, fiscal balance of the central government and external sector balance of the economy.
Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement
This statement sets out three-year rolling targets for six specific fiscal indicators in relation to GDP at market prices: fiscal deficit, revenue deficit, primary deficit, tax revenue, non-tax revenue and central government debt.
This document explains how the current fiscal policies are in conformity with sound fiscal management principles and provides the rationale for any major deviation in key fiscal measures.
This document mentions the estimates made for a scheme and programmes that are brought together and shown on a net basis (in terms of revenue and capital). It also contains explanatory notes detailing the objectives behind the expenditure proposed for various schemes and programmes.
The document provides details of tax and non-tax revenue receipts and capital receipts, and also explains the estimates.
Budget at a glance
This is a summary of receipts and disbursements, along with a brief description of key terms. Besides broad details of tax as well as non-tax revenues and other receipts, and Plan and Non-Plan expenditure, it also indicates the revenue deficit, the gross primary deficit and the gross fiscal deficit.
Besides, the set of documents also contains Budget highlights, which explains the key features of Budget. It indicates prominent achievements in various sectors of the economy and summarizes the budget proposals for funds allocation in important areas, among other features.