Fiscal Policy · Budget History · Types of Budget · Deficits · FRBM Act — SSC / Railway / UPSC / BPSC
Related to public income, expenditure, debt-related economic matters, and deficit financing.
Annual financial statement of the government outlining expenditure and income for a financial year (1st April – 31st March).
Morarji Desai → Chaudhary Charan Singh → Vishwanath Pratap Singh → Manmohan Singh
K.C. Neogy and H.N. Bahuguna
Prepared by the Department of Economic Affairs under the Ministry of Finance, along with other revenue departments and Tax Research Units.
| Type | Key Facts |
|---|---|
| Traditional / General Budget | Control over government expenditure and development; financial control of legislature over the executive |
| Performance Budget | Links allocations to functions, programmes, activities, outputs and performance; distinct from Outcome Budget. US: Hoover Commission 1949 and 1950 Budget Act; selected Indian central organisations prepared Performance Budgets for 1968–69 |
| Outcome Budget | First Union Outcome Budget: 2005–06, under Finance Minister P. Chidambaram |
| Zero-based Budgeting | Each item considered new (zero) after reconsideration; concept by Peter A. Pyhrr (1970); first used in America (1973); initiated in India by CSIR; applied to general budget for all ministries/departments 1987–88 |
| Gender Budget | Development, welfare, and empowerment of women; first initiated in Australia (1984); initiated in India in 2005–06 by P. Chidambaram |
| Type | Condition |
|---|---|
| Balanced Budget | Budget Revenue = Budget Expenditure |
| Surplus Budget | Budget Revenue > Budget Expenditure |
| Deficit Budget | Budget Revenue < Budget Expenditure |
| Part | Key Facts |
|---|---|
| Revenue Receipts | Neither increases government liability nor decreases assets; Types: Tax Revenue (Direct, Indirect) and Non-Tax Revenue (Fees & Fines, Interest Receipts, Profits & Dividends, External Grants) |
| Revenue Expenditure | Neither creates any asset nor decreases any liability; related to current account; Types: Interest Payments, Salaries & Pensions, Government Subsidies |
| Capital Receipts | Increases government liability or decreases assets; Types: Internal Market Loans, Foreign Loans and Aids, Repayment of Loans and Advances, Disinvestment |
| Capital Expenditure | Leads to creation of assets or decrease in government liability; Types: Construction of infrastructure (schools, hospitals, roads), Repayment of Loans, Investment |
| Planned Expenditure | Historical Plan classification; could include both revenue and capital expenditure |
| Non-Plan Expenditure | Historical expenditure outside Plan classification; not synonymous with purely consumption or non-developmental spending |
Total Receipts < Total Expenditure in the Budget.
Ended as a separate measure in 1997–98.
Revenue Receipts < Revenue Expenditure.
Revenue deficit minus grants-in-aid paid for creation of capital assets.
Fiscal deficit = expenditure minus revenue receipts and non-debt capital receipts; total borrowing requirement. It is not mathematically guaranteed to exceed revenue deficit.
Fiscal deficit minus interest payments. Official series report primary deficit well before 1997–98; that year relates to the old conventional budget-deficit framework ending.
Objective: Fiscal Consolidation and Public Expenditure Management.
| Topic | Key Fact |
|---|---|
| Fiscal Policy — Based on | Ideas of economist John Keynes |
| 'Budget' word — Origin | French word 'Bougette' (meaning small bag) |
| 'Budget' in Constitution | Not mentioned; Article 112 mentions 'Annual Financial Statement' |
| State Budget Article | Article 202 |
| India's First Budget | 7 April 1860 by James Wilson |
| First Budget of Independent India | R.K. Shanmukham Chetty — 26 November 1947 |
| First Budget of Republic of India | John Mathai — 1950 |
| First PM to Present Budget | Jawaharlal Nehru (1958–59) |
| Most Budgets Presented | Morarji Desai — 10 times |
| Railway Budget Separation | 1924 (Acworth Committee 1921) |
| Railway Budget Merged | 2017–18 (Bibek Debroy Committee recommendation) |
| Performance Budget — Origin | USA: Hoover Commission (1949) and Budget and Accounting Procedures Act (1950) |
| Performance Budget in India | Selected central organisations: 1968–69; wider adoption supported by ARC (1968) |
| Outcome Budget — India | 2005–06 (P. Chidambaram) |
| Zero-based Budgeting — Concept | Peter A. Pyhrr (1970) |
| Zero-based Budgeting — First Used | America (1973) |
| Zero-based Budgeting — India | Initiated by CSIR; general budget 1987–88 |
| Gender Budget — First Initiated | Australia (1984) |
| Gender Budget — India | 2005–06 (P. Chidambaram) |
| Vote on Account | Related only to expenditure side; ≠ Interim Budget |
| Budget Deficit Formula | Total Expenditure − Total Receipts |
| Budget Deficit ended as separate | 1997–98 |
| Revenue Deficit Formula | Revenue Expenditure − Revenue Receipts |
| ERD — Introduced | 2011–12 budget; included in FRBM: 2012–13 |
| ERD Formula | Revenue Deficit − Grants for Capital Assets Creation |
| Fiscal Deficit | Often larger than Revenue Deficit; not a mathematical necessity |
| Fiscal Deficit Formula | Total Expenditure − Total Receipts (excl. borrowings) |
| Primary Deficit Formula | Fiscal Deficit − Interest Payments; measured in official series before 1997–98 |
| FRBM Act | Passed 2003 | Implemented July 2004 |
| Planned Expenditure ended | From year 2017 (plan/non-plan division abolished) |