Union Finance Minister Nirmala Sitharaman presented the Budget for 2021-22 in the Lok Sabha on February 1. 

Budget documents

The list of Budget documents presented to the Parliament, besides the Finance Minister’s Budget Speech, are:

A. Annual Financial Statement (AFS)

B. Demands for Grants (DG)

C. Finance Bill

D. Statements mandated under FRBM Act:

    i. Macro-Economic Framework Statement

    ii. Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement

E. Expenditure Budget

F. Receipt Budget

G. Expenditure Profile

H. Budget at a Glance

I. Memorandum Explaining the Provisions in the Finance Bill

J. Output Outcome Monitoring Framework

K. Key Features of Budget 2021-22

L. Implementation of Budget Announcements, 2020-2021.

• The first three — Annual Financial Statement, Demands for Grants and  Finance Bill are mandated by Articles 112,113 and 110(a) of the Constitution respectively. 

• Statements mandated under FRBM Act are presented as per the provisions of the Fiscal Responsibility and Budget Management Act, 2003. 

• Other documents are in the nature of explanatory statements supporting the mandated documents with narrative in a user-friendly format suited for quick or contextual references.

• The “Output Outcome Monitoring Framework” have clearly defined outputs and outcomes for various central sector schemes and centrally sponsored schemes with measurable indicators against them and specific targets for FY 2021-22.

• A Hindi version of all these documents is also presented to the Parliament.

Annual Financial Statement (AFS)

• The Annual Financial Statement (AFS), the document as provided under Article 112, shows the estimated receipts and expenditure of the government for 2021-22 in relation to estimates for 2020-21 as also actual expenditure for the year 2019-20. 

• The receipts and disbursements are shown under three parts in which government accounts are kept. 

They are:

1) The Consolidated Fund of India

2) The Contingency Fund of India

3) The Public Account of India. 

• The Annual Financial Statement distinguishes the expenditure on revenue account from the expenditure on other accounts, as is mandated in the Constitution of India.

• The Revenue and the Capital sections together, make the Union Budget. 

• The estimates of receipts and expenditure included in the Annual Financial Statement are for expenditure net of refunds and recoveries.

• The significance of the Consolidated Fund, the Contingency Fund and the Public Account as well as the distinguishing features of the Revenue and the Capital portions are given below briefly:

1) The Consolidated Fund of India 

• The Consolidated Fund of India draws its existence from Article 266 of the Constitution. All revenues received by the government, loans raised by it, and also receipts from recoveries of loans granted by it, together form the Consolidated Fund of India. 

• All expenditure of the government is incurred from the Consolidated Fund of India and no amount can be drawn from the Consolidated Fund without due authorisation from the Parliament.

2) Contingency Fund of India

• Article 267 of the Constitution authorises the existence of a Contingency Fund of India which is an imprest placed at the disposal of the President of India to facilitate meeting of urgent unforeseen expenditure by the government pending authorisation from the Parliament. 

• Parliamentary approval for such unforeseen expenditure is obtained, ex post-facto, and an equivalent amount is drawn from the Consolidated Fund to recoup the Contingency Fund after such ex post-facto approval. 

• The corpus of the Contingency Fund as authorised by Parliament presently stands at Rs 500 crore. 

3) Public Account

• Moneys held by the government in trust are kept in the Public Account. The Public Account draws its existence from Article 266 of the Constitution of India. 

• Provident Funds, Small Savings collections, income of the government set apart for expenditure on specific objects such as road development, primary education, other Reserve/Special Funds etc, are examples of moneys kept in the Public Account. 

• Public Account funds that do not belong to the government and have to be finally paid back to the persons and authorities, who deposited them, do not require Parliamentary authorisation for withdrawals.

• The approval of the Parliament is obtained when amounts are withdrawn from the Consolidated Fund and kept in the Public Account for expenditure on specific objects.

• The actual expenditure on the specific object is again submitted for vote of the Parliament for withdrawal from the Public Account for incurring expenditure on the specific objects.

• The Union Budget can be demarcated into the part pertaining to revenue which is for ease of reference termed as Revenue Budget and the part pertaining to Capital which is for ease of reference termed as Capital Budget.

4) Revenue Budget

• The Revenue Budget consists of the revenue receipts of the government (tax revenues and other non-tax revenues) and the expenditure met from these revenues. 

• Tax revenues comprise proceeds of taxes and other duties levied by the Union. The estimates of revenue receipts shown in the Annual Financial Statement take into account the effect of various taxation proposals made in the Finance Bill. 

• Other non-tax receipts of the government mainly consist of interest and dividend on investments made by the government., fees and other receipts for services rendered by the government.

• Broadly, the expenditure which does not result in creation of assets for the government is treated as revenue expenditure. All grants given to the state governments/Union Territories and other parties are also treated as revenue expenditure even though some of the grants may be used for creation of capital assets.

5) Capital Budget

• Capital receipts and capital payments together constitute the Capital Budget. The capital receipts are loans raised by the government from the public (these are termed as market loans), borrowings by the government from the Reserve Bank of India and other parties through the sale of Treasury Bills, the loans received from foreign governments and bodies, disinvestment receipts and recoveries of loans from state and Union Territory governments and other parties. 

• Capital payments consist of capital expenditure on acquisition of assets like land, buildings, machinery, equipment, as also investments in shares, etc., and loans and advances granted by the central government to the state and the Union Territory governments, government companies, corporations and other parties.

6) Accounting Classification

• The estimates of receipts and disbursements in the Annual Financial Statement and of expenditure in the Demands for Grants are shown according to the accounting classification referred to under Article 150 of the Constitution.

• The Annual Financial Statement shows certain disbursements distinctly, which are charged on the Consolidated Fund of India. The Constitution of India mandates that such items of expenditure may be charged on the Consolidated Fund of India and are not required to be voted by the Lok Sabha.

They include: 

• Emoluments of the President.

• Salaries and allowances of the chairman and the deputy chairman of the Rajya Sabha and the Speaker and the deputy speaker of the Lok Sabha.

• Salaries, allowances and pensions of the judges of the Supreme Court, the Comptroller and Auditor-General of India and the Central Vigilance Commission.

• Interest on and repayment of loans raised by the government and payments made to satisfy decrees of courts. 

B. Demands for Grants

• Article 113 of the Constitution mandates that the estimates of expenditure from the Consolidated Fund of India included in the Annual Financial Statement and required to be voted by the Lok Sabha, be submitted in the form of Demands for Grants. 

• The Demands for Grants are presented to the Lok Sabha along with the Annual Financial Statement. 

• Generally, one Demand for Grant is presented in respect of each ministry or department. However, more than one Demand may be presented for a ministry or department depending on the nature of expenditure. 

• With regard to Union Territories without Legislature, a separate Demand is presented for each of such Union Territories.

• In Budget 2021-22 there are 101 Demands for Grants. 

• Each Demand normally includes the total provisions required for a service, that is, provisions on account of revenue expenditure, capital expenditure, grants to state and Union Territory governments and also loans and advances relating to the service.

C. Finance Bill

• At the time of presentation of the Annual Financial Statement before the Parliament, a Finance Bill is also presented in fulfilment of the requirement of Article 110 (1)(a) of the Constitution, detailing the imposition, abolition, remission, alteration or regulation of taxes proposed in the Budget. 

• It also contains other provisions relating to Budget that could be classified as Money Bill. A Finance Bill is a Money Bill as defined in Article 110 of the Constitution.

D. Statements mandated under FRBM Act

i. Macro-Economic Framework Statement

• The Macro-Economic Framework Statement is presented to Parliament under Section 3 of the Fiscal Responsibility and Budget Management Act, 2003 and the rules made thereunder.

• It contains an assessment of the growth prospects of the economy along with the statement of specific underlying assumptions. It also contains an assessment regarding the GDP growth rate, the domestic economy and the stability of the external sector of the economy, fiscal balance of the central government and the external sector balance of the economy.

ii. Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement

• The Medium-Term Fiscal Policy Statement cum Fiscal Policy Strategy Statement is presented to Parliament under Section 3 of the Fiscal Responsibility and Budget Management Act, 2003. 

• It sets out the three-year rolling targets for six specific fiscal indicators in relation to GDP at market prices, namely (i) Fiscal Deficit, (ii) Revenue Deficit, (iii) Primary Deficit (iv) Tax Revenue (v) Non-tax Revenue and (vi) Central Government Debt.

• It also outlines for the existing financial year, the strategic priorities of the government relating to taxation, expenditure, lending and investments, administered pricing, borrowings and guarantees. 

• The statement explains how the current fiscal policies are in conformity with sound fiscal management principles and gives the rationale for any major deviation in key fiscal measures.

Explanatory Documents

To facilitate a more comprehensive understanding of the major features of the Budget, certain other explanatory documents are presented. These are briefly summarized below:

E. Expenditure Budget

The provisions made for a scheme or a programme may be spread over a number of major heads in the Revenue and Capital sections in a Demand for Grants. In the Expenditure Budget, the estimates made for a scheme/programme are brought together and shown on a net basis on Revenue and Capital basis at one place.

F. Receipt Budget

Estimates of receipts included in the Annual Financial Statement are further analysed in the document ‘Receipt Budget’. The document provides details of tax and non-tax revenue receipts and capital receipts and explains the estimates.

G. Expenditure Profile

This document was earlier titled Expenditure Budget - Vol-I. It has been recast in line with the decision on Plan-Non Plan merger. It gives an aggregation of various types of expenditure and certain other items across demands.

H. Budget at a Glance

This document shows in brief, receipts and disbursements along with broad details of tax revenues and other receipts. This document provides details of resources transferred by the central government to state and Union Territory governments. This document also shows the revenue deficit, the gross primary deficit and the gross fiscal deficit of the central government. 

I. Memorandum Explaining the Provisions in the Finance Bill

To facilitate understanding of the taxation proposals contained in the finance Bill, the provisions and their implications are explained in the document titled Memorandum Explaining the Provisions in the Finance Bill.

J. Output Outcome Monitoring Framework

Outcome Budget with Output-Outcome Monitoring Framework (OOMF) for central sector schemes and centrally sponsored schemes with financial outlay of Rs 500 crore each, the output-outcome monitoring framework with itemized expenditure of the schemes will be prepared by the respective ministry/department and the same will be presented in the Parliament along with the Detailed Demand for Grants(DDG).

K. Key Features of Budget 2021-22

The document is a snapshot summary of the economic vision of the government and the major policy initiatives in the thrust areas of the economy for growth and welfare. Major milestones achieved in fiscal consolidation and management of the government finances along with a bird’s eye view of the key Budget proposals for the fiscal year 2021-22 are also included in the document.

L. Implementation of Budget Announcements 2020-21

The document summarises the status of implementation of the announcements made by the finance minister in the Budget Speech.

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