KEY TO BUDGET DOCUMENTS

BUDGET 2010-2011

1. The Budget documents presented to Parliament comprise, besides the Finance

Minister's Budget Speech, of the following:

A. Annual Financial Statement (AFS)

B. Demand for Grants (DG)

C. Appropriation Bill

D. Finance Bill

E. Memorandum Explaining the Provisions in the Finance Bill, 2010

F. Macro-economic framework for the relevant financial year

G. Fiscal Policy Strategy Statement for the financial year

H. Medium Term Fiscal Policy Statement

I. Expenditure Budget Volume -1

J. Expenditure Budget Volume -2

K. Receipts Budget

L. Budget at a glance

M. Highlights of Budget

N. Status of implementation of Announcements made in Finance Minister's Budget

Speech of the previous financial year

The documents shown from Serial A, B, C and D are mandated by Art.

112, 113, 114(3) and 110(a) of the Constitution of India respectively
while the documents at Serial F, G and H 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 or other content in a user friendly
format suited for quick or contextual references. Hindi version of all
these documents is also presented to Parliament. A web version is
hosted at http://indiabudget.nic.in/ub2010-11/ubmain.htm, with hyperlinks,
intended to make surfing more efficient.

2. In addition to the above, individual Departments/Ministries also

prepare and present to Parliament their Detailed Demands for Grants,
Performance and Outcome Budget, and their Annual Reports. The
Economic Survey which highlights the economic trends in the country
and facilitates a better appreciation of the mobilization of resources and
their allocation in the Budget is brought out by the Economic Division of
Department of Economic Affairs, Ministry of Finance. The Economic
Survey is presented to Parliament usually in advance of the Union
Budget. The web versions of these documents are normally posted by the
respective ministries/departments on their web sites.

3.1 A brief description of the Budget documents listed in para 1 is given

below.

3. (A) Annual Financial Statement (AFS), the core budget document, shows
estimated receipts and disbursements by the Government of India for 2010-11
in relation to estimates for 2009-10 as also expenditure for the year 2008-09.
The receipts and disbursements are shown under the three parts, in which
Government Accounts are kept viz.,(i) Consolidated Fund, (ii) Contingency Fund
and (iii) Public Account. Under the Constitution, Annual Financial Statement
distinguishes expenditure on revenue account from other expenditure.
Government Budget, therefore, comprises Revenue Budget and Capital
Budget. The estimates of expenditure included in the Annual Financial
Statement are for the net expenditure, i.e., after taking into account the
recoveries, as will be reflected in the accounts.

The significance of the Consolidated Fund, the Contingency Fund and the
Public Account as well as the distinguishing features of Revenue and Capital
Budget are given briefly below.
(i) The existence of the Consolidated Fund of India (CFI) flows from
Article 266 of the Constitution. All revenues received by Government,
loans raised by it, and also its receipts from recoveries of loans
granted by it form the Consolidated Fund. All expenditure of
Government is incurred from the Consolidated Fund of India and no
amount can be drawn from the Consolidated Fund without
authorisation from Parliament.
(ii) Article 267 of the Constitution authorises the Contingency Fund of
India which is an imprest placed at the disposal of the President of
India to facilitate Government to meet urgent unforeseen expenditure
pending authorization from Parliament. Parliamentary approval for
such unforeseen expenditure is obtained, post-facto, and an equivalent
amount is drawn from the Consolidated Fund to recoup the
Contingency Fund. The corpus of the Contingency Fund as authorized
by Parliament presently stands at Rs.500 crore.
(iii) Moneys held by Government in Trust as in the case of Provident
Funds, Small Savings collections, income of Government set apart for
expenditure on specific objects like road development, primary
education, Reserve/Special Funds etc. are kept in the Public Account.
Public Account funds do not belong to Government and have to be
finally paid back to the persons and authorities who deposited them.
Parliamentary authorisation for such payments is, therefore, not
required, except where amounts are withdrawn from the Consolidated
Fund with the approval of Parliament and kept in the Public Account
 for expenditure on specific objects, in which case, the actual
expenditure on the specific object is again submitted for vote of
Parliament for drawl from the Public Account for incurring expenditure
on the specific object.
(iv) Revenue Budget consists of the revenue receipts of Government (tax
revenues and other 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 receipts of
Government mainly consist of interest and dividend on investments
made by Government, fees, and other receipts for services rendered by
Government. Revenue expenditure is for the normal running of
Government departments and various services, interest payments on
debt, subsidies, etc. Broadly the expenditure which does not result in
creation of assets for Government of India is treated as revenue
expenditure. All grants given to 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 assets.
(v) Capital Budget consists of capital receipts and capital payments. The
capital receipts are loans raised by Government from public, called
market loans, borrowings by Government from Reserve Bank and other
parties through sale of Treasury Bills, loans received from foreign
Governments and bodies, 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 Central Government to State and
Union Territory Governments, Government companies, Corporations
and other parties. Capital Budget also incorporates transactions in the
Public Account.

(vi) 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 prescribed
under Article 150 of the Constitution, which enables Parliament and
the public to make a meaningful analysis of allocation of resources
and purposes of Government expenditures.
• The Annual Financial Statement shows separately, certain
disbursements as charged on the Consolidated Fund of India,
where the Constitution mandates such items of expenditure, like
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 Judges of the Supreme Court,
 Comptroller and Auditor-General of India and the Central Vigilance
Commission, interest on and repayment of loans raised by
Government and payments made to satisfy decrees of courts etc.
These items of expenditure are charged on the Consolidated Fund
of India and are not required to be voted by the Lok Sabha.

3. (B) Demands for Grants

(i) 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
are 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, in respect of large Ministries or
Departments more than one Demand is presented. In regard to Union
Territories without Legislature, a separate Demand is presented for
each of the Union Territories . In budget 2010-11 there are 105
Demands for Grants. Each Demand first gives the totals of 'voted' and
'charged' expenditure as also the 'revenue' and 'capital' expenditure
included in the Demand separately and also the grand total of the
amount of expenditure for which the Demand is presented. This is
followed by the estimates of expenditure under different major heads
of account. The breakup of the expenditure under each major head
between 'Plan' and 'Non-Plan' is also given. The amounts of recoveries
taken in reduction of expenditure in the accounts are also shown. A
summary of Demands for Grants is given at the beginning of this
document, while details of 'New Service' or 'New Instrument of Service'
such as, formation of a new company, undertaking or a new scheme,
etc., if any, are indicated at the end of the document.
(ii) 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. Where the provision for a
service is entirely for expenditure charged on the Consolidated Fund of
India, for example, interest payments (Demand for Grant No. 34), a
separate Appropriation, as distinct from a Demand, is presented for
that expenditure and it is not required to be voted by Lok Sabha.
Where, however, expenditure on a service includes both 'voted' and
'charged' items of expenditure, the latter are also included in the
Demand presented for that service but the 'voted' and 'charged'
provisions are shown separately in that Demand.

3. (C) Appropriation Bill

After the Demands for Grants are voted by the Lok Sabha, Parliament's
approval to the withdrawal from the Consolidated Fund of the amounts so
voted and of the amount required to meet the expenditure charged on the
Consolidated Fund is sought through the Appropriation Bill. Under Article
114(3) of the Constitution, no amount can be withdrawn from the Consolidated
Fund without the enactment of such a law by Parliament.

The whole process beginning with the presentation of the Budget and
ending with discussions and voting on the Demands for Grants requires
sufficiently long time. The Lok Sabha is, therefore, empowered by the
Constitution to make any grant in advance in respect of the estimated
expenditure for a part of the financial year pending completion of procedure for
the voting of the Demands. The purpose of the 'Vote on Account' is to keep
Government functioning, pending voting of 'final supply'. The Vote on Account
is obtained from Parliament through an Appropriation (Vote on Account) Bill.

3. (D) Finance Bill

At the time of presentation of the Annual Financial Statement before

Parliament, a Finance Bill is also presented in fulfillment 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. A Finance
Bill is a Money Bill as defined in Article 110 of the Constitution. It is
accompanied by a Memorandum explaining the provisions included in it.

3. (E) 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 of the Finance Bill.

3. (F) Macro-economic Framework Statement

The Macro-economic Framework Statement, presented to Parliament under

Section 3(5) of the Fiscal Responsibility and Budget Management Act and the
rules made thereunder contains an assessment of the growth prospects of the
economy with specific underlying assumptions. It contains assessment
regarding the GDP growth rate, fiscal balance of the Central Government and
the external sector balance of the economy.

3. (G) Fiscal Policy Strategy Statement

The Fiscal Policy Strategy Statement, presented to Parliament under

Section 3(4) of the Fiscal Responsibility and Budget Management Act, outlines
the strategic priorities of Government in the fiscal area for the ensuing
financial year relating to taxation, expenditure, lending and investments,
administered pricing, borrowings and guarantees. The Statement explains how
the current policies are in conformity with sound fiscal management principles
and gives the rationale for any major deviation in key fiscal measures.

3. (H) Medium-term Fiscal Policy Statement

 The Medium-term Fiscal Policy Statement, presented to Parliament under
Section 3(2) of the Fiscal Responsibility and Budget Management Act 2003,
sets out three-year rolling targets for four specific fiscal indicators in relation
to GDP at market prices namely (i) Revenue Deficit, (ii) Fiscal Deficit, (iii) Tax to
GDP ratio and (iv) Total out-standing Debt at the end of the year. The Statement
includes the underlying assumptions, an assessment of sustainability relating
to balance between revenue receipts and revenue expenditure and the use of
capital receipts including market borrowings for generation of productive
assets.

3.2 To facilitate a more comprehensive understanding of the major

features of the Budget, certain other explanatory documents are presented.
These are briefly summarized below.

3. (I) Expenditure Budget Volume-1

(i) This document deals with revenue and capital disbursements of various
Ministries/Departments and gives the estimates in respect of each under 'Plan' and
'Non-Plan'. It also gives analysis of various types of expenditure and broad reasons for
the variations in estimates.

(ii) Under the present accounting and budgetary procedures, certain classes of
receipts, like payments made by one department to another and receipts of capital
projects or schemes, are taken in reduction of the expenditure of the receiving
department. The estimates of expenditure included in the Demands for Grants are for
the gross amounts. While the estimates of expenditure included in the Annual
Financial Statement are for the net expenditure, after taking into account the
recoveries. The document Expenditure Budget makes certain other refinements like
netting expenditure of related receipts so that inflation of receipts and expenditure
figures are avoided and there can be a better appreciation of the magnitudes of various
expenditure. Contributions to International bodies and estimated strength of
establishment of various Government Departments and provision there for are
shown in separate annexes. A statement each showing (i) Plan grants and loans
released by Ministries/Departments directly to State and district level
autonomous bodies, under various Central and Centrally Sponsored Plan
schemes, (ii) Gender Budgeting and (iii) Schemes for development of Scheduled
Castes and Scheduled Tribes are also included in this document.

(iii) Plan Outlay

Plan expenditure forms a sizeable proportion of the total expenditure of the

Central Government. The Demands for Grants of the various Ministries show the Plan
expenditure under each head separately from the Non-Plan expenditure. The
Expenditure Budget Vol. 1 also gives the total Plan provisions for each of the
Ministries arranged under the various heads of development and highlights the
budget provisions for the more important Plan programmes and schemes. A
description of important schemes included in the Plan along with the objectives,
targets and achievements is given in the Outcome Budget of the respective Ministry.
Variations in the estimates of Plan expenditure are also explained.
 (iv) Public Sector Enterprises

A large part of the Plan expenditure incurred by the Central Government is

through public sector enterprises. Budgetary support for financing outlays of these
enterprises is provided by Government either through investment in share capital or
through loans. Expenditure Budget Vol. 1 shows the estimates of capital and loan
disbursements to public sector enterprises in 2009-2010 and 2010-2011 for Plan and
Non-Plan purposes and also the extra budgetary resources available for financing their
Plans. A detailed report on the working of public sector enterprises is given in the
document titled 'Public Enterprises Survey' brought out separately by the Department
of Public Enterprises. A report on the working of the enterprises under the control of
the various administrative Ministries is also given in the Annual Reports of the various
Ministries circulated to Members of Parliament separately. The annual reports along
with the audited accounts of each of the Government companies are also separately
laid before Parliament. Besides, the reports of the Comptroller and Auditor General
of India on the working of various public sector enterprises are also laid before
Parliament.

(v) Commercial Departments

Railways is the principal departmentally-run commercial undertaking of

Government. The Budget of the Ministry of Railways and the Demands for Grants
relating to Railway expenditure are presented to Parliament separately. The total
receipts and expenditure of the Railways are, however, incorporated in the Annual
Financial Statement of the Government of India. To portray the actual working and not
inflate either receipts or expenditure, the expenditure as reflected in the Receipts
Budget & Expenditure Budget Vol. 1 and Vol. 2 has been taken net of receipts. The
Demands for Grants of the Department of Telecommunications, are presented along
with other Demands of the Central Government.

(vi) The receipts and expenditure of the Defence Department shown in the Annual
Financial Statement, are explained in greater detail in the document Defence Services
Estimates presented along with the Detailed Demands for Grants of the Ministry of
Defence.

(vii) The details of grants given to bodies other than State and Union Territory
Governments are given in the statements of Grants-in-aid paid to non-Government
bodies appended to Detailed Demands for Grants of the various Ministries. Annexure 5
to Expenditure Budget Vol.1 shows details of grants-in-aid exceeding Rs.5 lakhs
(recurring) or Rs.10 lakhs (non-recurring) to private institutions, organizations and
individuals sanctioned during the year 2008-09.

3. (J) Expenditure Budget Volume-2

The provisions made for a scheme or a programme may spread over a

number of Major Heads in the Revenue and Capital sections in a Demand for
Grants. In the Expenditure Budget Vol. 2, the estimates made for a
scheme/programme are brought together and shown on a net basis at one
place, by Major Heads. To understand the objectives underlying the
expenditure proposed for various schemes and programmes in the Demands
for Grants, suitable explanatory notes are included in this volume in which,
wherever necessary, brief reasons for variations between the Budget estimates
and revised estimates for the current year and requirements for the ensuing
Budget year are also given.

3. (K) Receipts Budget

 Estimates of receipts included in the Annual Financial Statement are further
analysed in the document "Receipts Budget". The document provides details
of tax and non-tax revenue receipts and capital receipts and explains the
estimates. The document also provides the arrears of tax revenues and non-tax
revenues, as mandated under the Fiscal Responsibility and Budget
Management Rules, 2004. Trend of receipts and expenditure along with deficit
indicators, statement pertaining to National Small Savings Fund (NSSF),
statement of revenues foregone, statement of liabilities, statement of
guarantees given by the government, statements of assets and details of
external assistance are also included in Receipts Budget.

3. (L) Budget at a Glance

(i) This document shows in brief, receipts and disbursements along with broad
details of tax revenues and other receipts. This document also exhibits broad break-up
of expenditure - Plan and Non-Plan, allocation of Plan outlays by sectors as well as by
Ministries/Departments and 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.
The excess of Government's revenue expenditure over revenue receipts constitutes
revenue deficit of Government. Government mainly borrows through issue of dated
securities, i.e. market borrowings. Apart from this, Government also borrows funds
under many schemes which form part of capital receipts. The difference between the
total expenditure of Government by way of revenue, capital and loans net of
repayments on the one hand and revenue receipts of Government and capital receipts
which are not in the nature of borrowing but which finally accrue to Government on the
other, constitutes gross fiscal deficit. Gross primary deficit is measured by gross fiscal
deficit reduced by gross interest payments. In the Budget documents 'gross fiscal
deficit' and 'gross primary deficit' have been referred to in abbreviated form 'fiscal
deficit' and 'primary deficit', respectively. This document also shows liabilities of the
Government on account of securities (bonds) issued in lieu of oil and fertilizer
subsidies.

(ii) The document also includes a statement indicating the quantum and nature
(share in Central Taxes, grants/loan) of the total Resources transferred to States and
Union Territory Governments. Details of these transfers by way of share of taxes,
grants-in-aid and loans are given in Expenditure Budget Volume.1. Bulk of grants and
loans are disbursed by the Ministry of Finance and are included in the Demand
'Transfers to State and Union Territory Governments'. The grants and loans released to
States and Union Territories by other Ministries/Departments are provided for in their
respective Demands.

3. (M) Highlights of Budget

This document explains the key features of the Budget 2010-11, inter alia,
indicating the prominent achievements in various sectors of the economy. It
also explains, in brief, the budget proposals for allocation of funds to be made
in important areas. The summary of tax proposals is also reflected in the
document.

3. (N) Detailed Demands for Grants

 The Detailed Demands for Grants are laid on the table of the Lok Sabha
sometime after the presentation of the Budget, but before the discussion on
Demands for Grants commences. Detailed Demands for Grants further
elaborate the provisions included in the Demands for Grants as also actual
expenditure during the previous year. A break-up of the estimates relating to
each programme/organisation, wherever the amount involved is not less than
Rs.10 lakhs, is given under a number of object heads which indicate the
categories and nature of expenditure incurred on that programme, like salaries,
wages, travel expenses, machinery and equipment, grants-in-aid, etc. At the
end of these Detailed Demands are shown the details of recoveries taken in
reduction of expenditure in the accounts.

3. (O) Outcome Budget

(i) With effect from Financial Year 2007-08, the Performance Budget and the
Outcome Budget hitherto presented to Parliament separately by
Ministries/Departments, are merged and presented as a single document titled
"Outcome Budget" by each Ministry/Department in respect of all
Demands/Appropriations controlled by them, except those exempted from this
requirement. Outcome Budget broadly indicates physical dimensions of the financial
budget of a Ministry/Department, indicating actual physical performance in the
preceding year (2008-2009), performance in the first nine months (up to December) of
the current year (2009-2010) and the targeted performance during the ensuing year
(2010-2011).

(ii) Outcome Budget contains a brief introductory note on the organization and
function of the Ministry/Department, list of major programmes/schemes implemented
by the Ministry/Department, its mandate, goal and policy framework, budget estimates,
scheme-wise analysis of physical performance and linkage between financial outlays
and outcome, review covering overall trends in expenditure vis-a-vis budget estimates
in recent years, review of performance of statutory and autonomous bodies under the
administrative control of the Ministry/Department, reform measures, targets and
achievements and plan for future refinements.

(iii) As far as feasible, coverage of women and SC/ST beneficiaries under various
developmental schemes and schemes for the benefit of North Eastern Region are also
separately indicated.

3. (P) Annual Reports

A descriptive account of the activities of each Ministry/Department during

the year 2009-2010 is given in the document Annual Report which is brought
out separately by each Ministry/Department and circulated to Members of
Parliament at the time of discussion on the Demands for Grants.

3. (Q) Economic Survey

The Economic Survey brings out the economic trends in the country, which
facilitates a better appreciation of the mobilisation of resources and their
allocation in the Budget. The Survey analyses the trends in agricultural and
industrial production, infrastructure, employment, money supply, prices,
imports, exports, foreign exchange reserves and other relevant economic
factors which have a bearing on the Budget, and is presented to the Parliament
ahead of the Budget for the ensuing year.

The Budget of the Central Government is not merely a statement of

receipts and expenditure. Since Independence , with the launching of Five Year
Plans, it has also become a significant statement of governmental policy. The
Budget reflects and shapes, and is, in turn, shaped by the country's economic
life. For a better appreciation of the impact of governmental receipts and
expenditure on the other sectors of the economy, it is necessary to group them
in terms of economic magnitudes, for example, how much is set aside for
capital formation, how much is spent directly by the Government and how
much is transferred by Government to other sectors of the economy by way of
grants, loans, etc. This analysis is contained in the document Economic and
Functional Classification of the Central Government Budget which is brought
out by the Ministry of Finance separately.

INDEX

Topics Paragraph Number

Accounting Classification 3(A)(vi)
3(A),3(A)(iv),(vi),3(B)(i),3(D),3(I)(ii),
Annual Financial Statement
(v),(vi),3(K)
Annual Report 2,3(I)(iv),3(P)
Appropriation 3(B)(ii),3(O)
Appropriation Bill 3(C)
Appropriation (Vote on Account) Bill 3(C)
Budget at a Glance 3(L)
Budget/Budget of the Central Government 3(Q)
Capital Budget 3(A),3(A)(v)
Charged Expenditure 3(B)(i)
Consolidated Fund 3(A),3(A)(i)(ii)(iii)(vi),3(B)(i)(ii),3(C)
Contingency Fund 3(A),3(A)(ii)
Defence Services Estimates 3(I)(vi)
3(A)(vi),3(B)(i),3(C),3(I)(ii),
Demands for Grants
(iii),(v),3(J),3(N),3(P)
Detailed Demands for Grants 2,3(I)(vi),(vii),3(N)
Economic Survey 2,3(Q)
Expenditure Budget 3(I),(ii)(iii)(iv)(vii), 3(J),3(L)(ii)
External Assistance 3(K)
Extra Budgetary Resources 3(I)((iv)
Finance Bill 3(A)(iv),3(D),3(E)
Fiscal Deficit 3(H),3(L)(i)
Fiscal Policy Strategy Statement 3(G)
Grants-in-aid 3(I)(vii)
Guarantees given by the Central
3(K)
Government
International Bodies - Contribution to
3(I)((ii)
Market Loans
Macro-economic Framework Statement 3(F)
Medium-term Fiscal Policy Statement 3(H)
Memorandum Explaining the Provisions in
3(D),3(E)
the Finance Bill
New Service 3(B)(i)
Outcome Budget 2,3(I)(iii),3(O)(i)(ii)
Plan Outlay 3(I)(iii),3(L)(i)
Public Account 3(A),3(A)(iii),(v)
Public Enterprises Survey 3(I)(iv)
Public Sector Enterprises 3(I)(iv)
Railways 3(I)(v)
Receipts Budget 3(I)(v),3(K)
Resources transferred to States/Union
3(L)(i)(ii)
Territories
Revenue Budget 3(A)(iv)
Revenue Deficit 3(H),3(L)(i)
Strength of Establishment of Govt Deptts 3(I)(ii)
Summary of Demands for Grants 3(B)(i)
Treasury Bills 3(A)(v)
Vote on Account 3(C)