March 15, 2013 | By | Add a Comment

What is Budget?

Budget is an annual financial statement that covers the transactions of the state government during the previous year, current year and next year. It gives information about the policies of the government for the next one year. It is a policy document whose content is generally technical in nature and whose publication every year has been ritualized.


Plan and Non-Plan

Plan expenditures are those which are estimated after discussions between Central Planning Commission and the State Planning Board. They are in the form of schemes and missions.

Non-Plan Revenue Expenditure includes wages, subsidies, grants to lower tier governments and foreign governments, police, economic, social and certain general services.

Non-Plan Capital Expenditure includes defence expenditure and various loans made.


Capital Expenditure

Expenditure incurred with the object either of increasing assets which are permanent in character or reducing the recurring liabilities is known as capital expenditure. The benefit from capital expenditure flow over a period of years. Apart from Plan & Non Plan lending and capital outlay, capital expenditure consists of discharge on internal debt and repayment of loans to the centre.


Revenue Expenditure

Expenditure incurred on a recurring basis like maintenance and repair, and wages are referred to as revenue expenditure. It broadly consists of Plan and Non Plan support to state Public Sector Units (PSUs), gross expenditure on lotteries and Plan outlay on Centrally Sponsored Schemes.


Capital Receipts

Capital Receipts of the government lead to a reduction in the assets or an increase in the liabilities of the government. Larger capital receipts/borrowings results in shifting the burden of resource mobilization to the future generation. Capital Receipts include loans from the open market and central Government; receipts through sale of treasury bills etc, small savings, recovery of loans and advances, etc.


Revenue Receipts

Revenue receipts neither reduce the assets of the government nor increases its liabilities. It consists of proceeds of total Tax and Non- Tax Revenues of the government. Grants-in-aid from the central government is a part of non-tax revenue.


Revenue Deficit

Revenue deficit is the excess of revenue expenditure over revenue receipts. If the economy has a revenue deficit, it means it is unable to meet its recurring expenses.


Fiscal Deficit

Deficit indicates the borrowing to be made by the government in a particular year for which the Budget is meant. It refers to the excess of total expenditure over the receipts (only total revenue receipts and non-debt capital receipts). This is more comprehensive measure of budgetary imbalances of an economy.


Primary Deficit


Primary deficit is the fiscal deficit excluding interest payments on debt. It indicates whether the total borrowing is increasing in an economy or not.


Public Debt

Kerala’s overall debt consists of internal debt, small savings, Provident Fund and other small funds. Internal debt forms a major part of the total debt stock which consists of market borrowings, special securities issued to National Small Savings Fund and loans from banks and financial intermediaries.


Central Transfers

There are two major kinds of central transfers. One is in the form of a share received from the centre’s collection of taxes and duties and the other is in the form of grants-in-aid which is transferred as Central Plan Schemes or Centrally Sponsored Schemes.

Filed in: Budget Primers

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