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TNPSC Free Notes Economy In English – Budget

இந்தக் கட்டுரையில், TNPSC குரூப் 1, குரூப் 2, குரூப் 2A, குரூப் 4 மாநிலப் போட்டித் தேர்வுகளான TNUSRB, TRB, TET, TNEB போன்றவற்றுக்கான  முறைகள் இலவசக் குறிப்புகளைப் பெறுவீர்கள்.தேர்வுக்கு தயாராவோர் இங்குள்ள பாடக்குறிப்புகளை படித்து பயன்பெற வாழ்த்துகிறோம்.


 The word ‘budget’ is said to have its origin from the French word “Bougette”
which refers to ‘a small leather bag’.
 The budget is an annual financial statement which shows the estimated income
and expenditure of the Government for the forthcoming financial year.
 “It is a document containing a preliminary approved plan of public revenue and

Reney Stourn.

 “The budget has come to mean the financial arrangements of a given period, with
the usual implication that they have been submitted to the legislature for


Union Budget and State Budget
 India is a federal economy hence public budget is divided into two layers of the
 According to the Indian Constitution, the Central Government has to submit
annual financial statement, i.e., Union Budget under Article 112 to the Parliament
and each State Government has to submit the same for the State in the
Legislative Assembly under Article 202.
Revenue and Capital Budget
On the basis of expenditure on revenue account and other accounts, a budget can be
presented in two ways:
Revenue Budget:
 It consists of revenue receipts and revenue expenditure.
 Moreover, the revenue receipts can be categorised into tax revenue and non-tax
 Revenue expenditure can also be categorised into plan revenue expenditure and
non-plan revenue expenditure.
Capital Budget:
 It consists of capital receipts and capital expenditure.
 In this case, the main sources of capital receipts are loans, advances etc.
 On the other side capital expenditure can be categorised into plan capital expenditure
and non-plan capital expenditure.

Types of Budget

Supplementary Budget:
 During the time of war emergencies and natural calamities like tsunami, flood
etc., the expenditures allotted in the budget provisions are not always enough.
 Under these circumstances, a supplementary budget can be presented by the
Government to tackle these unforeseen events.

 Under Article 116 of the Indian Constitution, the budget can be presented in the middle
of the year.
 The reason may be political in nature. The existing Government may or may not
continue for the year, on account of the fact that elections are due, then the
Government places a ‘lame duck budget’. This is also called ‘Vote-on-account Budget’.
 The vote on account budget is a special provision by which the Government gets
permission from the parliament to incur expenditures on necessary items till the budget
is finally passed in the parliament.
 The legal permission of both the Houses of the parliament for the withdrawal of money
from the Consolidated Fund of India to meet the requisite expenses till the budget is
finally approved is known as vote-on – account budget.
 This type of budget is generally sanctioned for not more than two months.
Zero Base Budget:
 The Government of India presented Zero-Base-Budgeting (ZBB first) in 1987-88.
 It involves fresh evaluation of expenditure in the Government budget, assuming it as a
new item.
 The review has been made to provide justification or otherwise for the project as a
whole in the light of the socio-economic objectives which have been already set up for
this project and as well as in view of the priorities of the society.
Performance Budget:
 When the outcome of any activity is taken as the base of any budget, such budget is
known as ‘Performance Budget’.
 For the first time in the world, the performance budget was made in USA.
 The Administrative Reforms Commission was set up in 1949 in America under Sir
 This commission recommended making of a ‘Performance Budget’ in USA.
 In the Performance Budget, it is the compulsion of the government to tell ‘what is
done’, ‘how much done’ for the betterment of the people. In India, the Performance
Budget is also known as ‘Outcome Budget’.
Balanced Budget Vs Unbalanced Budget
A. Balanced Budget

 Balanced budget is a situation, in which estimated revenue of the government
during the year is equal to its anticipated expenditure.
B. Unbalanced Budget
 The budget in which Revenue & Expenditure are not equal to each other is known as
Unbalanced Budget.
 Unbalanced budget is of two types:
1. Surplus Budget
2. Deficit Budget

Surplus Budget
 The budget is a surplus budget when the estimated revenues of the year are greater
than anticipated expenditures.
 Government Estimated revenue > Estimated Government Expenditure.
Deficit Budget
 Deficit budget is one where the estimated government expenditure is more than
expected revenue.
 Government’s estimated Revenue < Government’s proposed Expenditure.

Types of Budget Deficits

Budgetary Deficits
 Budget deficit is a situation where budget receipts are less than budget expenditures.
 This situation is also known as government deficit.
In reference to the Indian Government budget, budget deficit is of four major types.
(a) Revenue Deficit
(b) Budget Deficit
(c) Fiscal Deficit, and
(d) Primary Deficit
(A) Revenue Deficit
 It refers to the excess of the government revenue expenditure over revenue receipts.
 It does not consider capital receipts and capital expenditure.
 Revenue deficit implies that the government is living beyond its means to conduct day-
to-day operations.
 When RE – RR > 0
Revenue Deficit (RD) = Total Revenue Expenditure (RE) – Total Revenue Receipts (RR).

(B) Budget Deficit
Budget deficit is the difference between total receipts and total expenditure (both revenue
and capital)
Budget Deficit = Total Expenditure – Total Revenue
(C) Fiscal Deficit
Fiscal deficit (FD) = Budget deficit – Government’s market borrowings and liabilities
So the fiscal deficit is greater than the budget deficit.
(D) Primary Deficit
 Primary deficit is equal to fiscal deficit minus interest payments.
 It shows the real burden of the government and it does not include the interest
burden on loans taken in the past.
 Thus, primary deficit reflects borrowing requirement of the government exclusive
of interest payments.
 So the fiscal deficit will be greater than the primary deficit.
Primary Deficit (PD) = Fiscal deficit (PD) – Interest Payment (IP)


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