Budget Manual
Total Page:16
File Type:pdf, Size:1020Kb
Government of India BUDGET MANUAL MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS BUDGET DIVISION NEW DELHI SEPTEMBER, 2010 BUDGET MANUAL MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS NEW DELHI |ÉhÉ¤É àÉÖJÉVÉÉÒÇ ÉÊ´ÉkÉ àÉÆjÉÉÒ, £ÉÉ®iÉ PRANAB MUKHERJEE FINANCE MINISTER INDIA MESSAGE I am happy to note that the Budget Division of Department of Economic Affairs, Ministry of Finance, is bringing out a Budget Manual. This is the first time that such a manual is being brought out for Government of India. The Budget process of our country predates the independence. Budget was first introduced on 7th April, 1860, two years after the transfer of Indian administration from East-India Company to British Crown. The first Finance Member, who presented the Budget, was James Wilson. Mr Liaquat Ali Khan, Member of the interim Government presented the budget of 1947-48. After Independece, India’s first Finance Minister Shri R.K. Shanmukham Chetty, presented the first Budget on 26th November, 1947. Since then, this has evolved over the past six decades to reflect the strength of our democratic processes in shaping our economy. It has emerged as a crucial tool for Public Finance Management. I congratulate the Budget Division for taking this initiative in preparing the Union Government Budget Manual. This Manual is expected to serve as a comprehensive reference material not only to the officers involved in the Budget process but other users and interested stakeholders as well. I am sure this Budget Manual will be a valuable document in understanding the processes and nuances relating to the Union Government Budget (Pranab Mukherjee) FOREWORD The Budget Manual is a comprehensive document which captures the content of the Union Budget as well as the procedures and activities connected with the preparation of the Annual Budget. The processes and guidelines have been simplified and put in a logical sequence for easy comprehension. The Annexes have been added wherever required for providing a more holistic perspective on related matters. 2. The Budget related instructions and guidelines were till now available in the form of executive instructions and guidelines etc. including the annual Budget Circulars. These, however, did not cover many facets of the Budget making process. There was, therefore, a felt need for a comprehensive Manual to bring together the entire Budget related features and activities. This Manual unravels the detailed processes involved in the entire gamut of Budget preparation. It is also expected to bring about greater transparency on the subject. 3. This Manual would provide deeper understanding to the officials of Ministries/Departments of their roles and responsibilities with respect to preparation of documents and statements included in the Budget. It is expected to serve as a guidebook for uniform administration of the Budgeting procedures and practices in the Government of India including the line Ministries and Departments. 4. I would like to place on record the excellent work done by the Budget Division of Department of Economic Affairs in preparing this Manual. It has evolved as a result of wide consultations through the two sub-committees appointed for the purpose comprising of past and present Budget Division officers as well as valuable suggestions and inputs provided by the Under Secretaries and Deputy Directors of Budget Division. The role of Additional Secretary (Mrs. L.M. Vas) in conceptualizing and preparing the detailed outline of the Manual and Joint Secretary Budget (Shri Shaktikanta Das) in heading the sub-committees and providing necessary guidance and support have been crucial. 5. Finally, this being the first Budget Manual of the Government of India, I would be grateful for suggestions to bring about further improvements, if any, and also for bringing to our notice any error, inaccuracy or omission for correction in the next edition. (Ashok Chawla) Finance Secretary New Delhi, September 1st, 2010 PREFACE Budget Manual is a compendium of general provisions and procedures relating to Budget making to be followed by all offices in the Union Government which are involved in the budgeting exercise and dealing with matters relating to Budget. This Manual is an attempt to cover the existing void faced hitherto due to the lack of a comprehensive guidebook on the subject matter of Budget process in the Central Government. An attempt has been made to incorporate all the issues related to Budget so as to make it a comprehensive one stop guidance material. 2. The purpose of this Budget Manual is to provide a guidance material and a training tool for the managerial and supervisory staff and above all to the employees dealing with the Budget and Budget related issues. It provides a comprehensive outline of the processes of budgeting, and other related issues along with various legislative and administrative policies, principles and practices which outline the budgeting system in India. The effort has been to draft this Manual in the form of a simple and usable document and as far as possible, to comprehensively outline the procedures and practices in vogue including the detailed check-lists and the mechanisms involved in its operation. The Manual attempts to outline in a linear fashion the entire chain of events leading to the presentation of Union Budget and passing of the related Appropriation Bills. 3. Chapter I is introductory in nature and brings out the meaning and importance of Budget, the important Constitutional provisions related to Budget, the various Budget documents and their composition and the recommendations of the Estimates Committee on the Form and Contents of Demands for Grants. Chapter II of the Manual deals with the Organizational aspects bringing out the roles and responsibilities of the Parliament and the Parliamentary Committees and the responsibilities of various wings of the Executive in the Budget making process. Chapter III of the Manual deals in a comprehensive manner with the Structure of Government Accounts and the classification system. This is very crucial for any budgetary process since the budgetary and accounting classifications follow a common pattern and their clear understanding is crucial for any analysis on Budget and the related provisions. A detailed analysis of the three Funds viz. the Consolidated Fund of India, the Contingency Fund of India and the Public Accounts of India has also been dealt with in this Chapter. 4. Chapters IV and V are the core of this Manual. Chapter IV brings out the entire chain of Budget preparation process right from the issue of the Annual Budget Circular. It deals in great detail with the process of estimations relating to receipts and expenditure and the consequent compilation of the Statement of Budget Estimates. All the related formats of estimation have been dealt with briefly in this Chapter in a sequential manner. Chapter IV also deals with the process of Pre-Budget meetings and the various instructions relating to furnishing of information by the Ministries/Departments for the preparation of Budget Statements. Chapter V of the Manual brings out the calendar of Budget activities and timelines including those in the Parliament. This Chapter also brings out in minutest detail the duties and responsibilities relating to various Budget documents/statements explaining alongside the process of their compilation. The checklists used internally for the preparation of various Statements in the Budget documents have been made a part of this Chapter for easy reference and understanding by all users. This Chapter also brings out the process of Budget related security arrangements including the system of Lock-in and the processes and check-lists for the preparation of State Budgets while under President Rule. 5. Chapters VI and VII of the Manual deal with the issues relating to Budget Implementation and their Reporting and Evaluation respectively. Chapter VI apart from others outlines the role of Departments in spending and control, cash management and the much in use processes of Re- appropriations, Supplementary Demands for Grants and the related provisions in the General Financial Rules and the Delegated Financial Powers Rules. This Chapter also deals with some common Budget related irregularities which can be avoided by taking precautionary measures. The last Chapter of the Manual brings out the main Budget related Reporting and Evaluation processes including the Act provisions, guidelines and instructions relating to FRBM Statements, Outcome Budget, Mid-term Evaluation of Plan Schemes, Audit Reports of C&AG and the reviews by the Public Accounts Committee. The Manual also includes a number of Annexes wherever required for providing a more holistic perspective on the subject matters dealt with in the related Chapters. (Shaktikanta Das) Joint Secretary- Budget CONTENTS Page No. GLOSSARY OF IMPORTANT BUDGET RELATED TERMS 1-3 Chapter I 4-13 INTRODUCTION 4 MEANING AND IMPORTANCE OF THE BUDGET 4-6 IMPORTANT CONSTITUTIONAL PROVISIONS RELATED TO BUDGET 6-8 BUDGET DOCUMENTS 8-9 RECOMMENDATIONS OF THE ESTIMATES COMMITTEE ON THE FORM AND CONTENTS OF DEMANDS FOR GRANTS 9-12 SOME OTHER IMPORTANT BUDGET RELATED DOCUMENTS 12-13 Chapter II - Organizational Aspects 14-30 ROLE OF THE PARLIAMENT 14 PRESIDENT’S APPROVAL 14 SUMMARY FOR THE PRESIDENT 14-15 SUMMARY FOR THE CABINET 15 BUDGET PRESENTATION 15 GENERAL DISCUSSIONS 15 CUT- MOTIONS 15-16 GUILLOTINE 16 APPROPRIATION BILL 16 FINANCE BILL 16-17 VOTE ON ACCOUNT 17 ROLE OF THE EXECUTIVE IN THE BUDGET