Budget Preparation (Cycle)


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.

The Budget Cycle normally starts towards the end of September of the current year and lasts till
May of the next financial year. On the presumption that Budget shall be presented at 11:00 hours on the 28th/29th of February of a year (last working Day of February), the Budget Division prepares a comprehensive Schedule for carrying out the budget preparation activities. In the year in which General Elections to the Lok Sabha are held, the interim Budget is presented to Parliament on any given day convenient to Government. After the General Elections are over and assumption of office by the new Government, the Regular Budget is presented to Parliament on any date convenient to Government or as decided by the new Government. The Budget
Schedule is constantly reviewed by the senior officers to watch the progress since budget span leaves no scope for slippages. The Schedule clearly indicates the Division/Organization/ Ministry/Department responsible for various tasks/activities along with the timeframe therein.
Budget for a year is prepared by the Budget
 
Division in the Ministry of Finance broadly on the basis of detailed estimates of expenditure and
receipts received from various Departments/Ministries of Government of India and its own subordinate estimating authorities. The General Financial Rules also prescribe the broad guidelines, procedures and forms for the preparation of budget estimates of receipts and expenditure by the Ministries. The estimates of expenditure are prepared separately for Capital and Revenue as a constitutional requirement and Plan and Non Plan in keeping with the existing classification system. The estimates of Plan expenditure are made on the basis of the approved plan allocations intimated by the Planning Commission.
 
The detailed estimates of expenditure are prepared by the estimating authorities according to
their assessments of requirements for the ensuing year, keeping in view the actual requirements in the past, current year’s trends of expenditure, the decisions taken by the Government which will have a bearing on the funding requirements etc.
 
The following paragraphs bring out broadly the process of estimation and their collation which leads to the preparation of Budget Estimates -
 
(i) Budget Circular –
 
The commencement of Budget Process takes place with the issue of the Budget Circular , normally issued in the month of September each year. The Budget Circular is issued with the purpose of providing guidance to Ministries/Departments in framing their Revised Estimates for the current year and the Budget Estimates for the ensuing financial year, for further rendition to the Budget Division. This circular gives detailed instructions on the preparation of estimates of various types of receipts and expenditure, including the formats and statements in which the estimates are required to be furnished. The Budget Circular also outlines the processes that are
to be followed with reference to various estimating requirements and the scheduled dates by which the information in the prescribed formats are required to be made available to Budget Division. The detailed procedures for the preparation of each of these Budget estimates are brought out in the following paragraphs.
 
 
(ii) Estimates of Receipts
 
Revenue Receipt
Estimates of Central taxes and duties administered by the Central Board of Direct Taxes
(CBDT) and Central Board of Excise and Customs (CBEC) as also the estimates of cess collection as levied by Government from time to time are required to be furnished separately by CBEC and CBDT to Budget Division as per the prescribed timelines. The details relating to commodity-wise estimates of manufacture/imports, duty rates and foreign exchange rate assumptions and projected rates form the main basis of the estimating indirect tax collections. The tax rates decisions and growth assumptions are primarily the basis for making Direct tax estimates. These estimates are made available to the Budget Division in the required format through the Tax Research Unit (TRU) on the CBEC side and Tax Policy Legislation (TPL) Division of CBDT. The format largely requires the estimates to be provided under the broad items of taxation along with the estimates provided separately for cess and surcharge.
 
For the purpose of preparing receipts estimates, all other items of revenue receipts are divided into the following categories:
 
(i) Taxes, duties and receipts in relation to Union territories without legislature;
(ii) Interest receipts in respect of loans and advances sanctioned by Ministries/ Departments to State and Union territory Governments, foreign Governments, public sector enterprises and others including Government servants, interest charged to working expenses of departmental
commercial undertakings, etc.;
(iii) Estimates of Revenue receipts adjustable under Major Head ‘1605 - External Grant
Assistance’ and ‘1606-Aid Material and Equipment’; and
(iv) All other Revenue receipts including estimates of cess, but excluding the cess
collected by the Central Board of Excise and Customs and Central Board of Direct Taxes.
Receipt estimates, except for items at sub-para (ii) and (iii) above, is to be furnished to the Budget Division in the form prescribed in Appendix-I of the Budget Circular. This form is also to be used for Capital receipts except certain other Capital Receipts for which specific formats have been prescribed. Estimates of taxes, duties and other revenue receipts in relation to Union territory administrations is required to be furnished to Finance Ministry by Director of Accounts, Andaman and Nicobar Islands Administration and Director of Accounts, Daman and Diu Administration, and for the other Union Territories, by the concerned Accountants General, in the same form as prescribed in Appendix-I.


Monday, 15th Feb 2016, 11:27:36 AM

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