What Is a Budget?

A budget is an estimation of revenue and expenses over a specified future

period of time and is usually compiled and re-evaluated on a periodic basis.
Budgets can be made for a person, a family, a group of people, a business, a
government, a country, a multinational organization or just about anything else
that makes and spends money. At companies and organizations, a budget is an
internal tool used by management and is often not required for reporting by
external parties

A budget is a microeconomic concept that shows the trade-off made when one
good is exchanged for another. In terms of the bottom line – or the end result of
this trade-off – a surplus budget means profits are anticipated, a balanced
budgetmeans revenues are expected to equal expenses, and a deficit
budget means expenses will exceed revenues.

Government budget is an annual statement, showing item wise estimates of

receipts and expenditure during fiscal year i.e. financial year. The receipts and
expenditure, shown in the budget, are not the actual figure, but the estimated
values for the coming fiscal year.

Components of budget refers to structure of the budget.

Two main components of Budget are: 
What is the revenue budget?

This consists of the revenue receipts of the 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. Other
revenues are receipts of the government mainly consisting of interest and dividend on investments made by the
government, and fees and receipts for other services rendered by the government. Revenue expenditure is
expenditure for the normal running of government departments and various services, interest charges on debt
incurred by government, subsidies and so on. Broadly speaking, expenditure which does not result in the creation
of assets is treated as revenue expenditure. All grants given to state governments and other parties are also
treated as revenue expenditure even though some of the grants may be for creation of assets.

What is the capital budget?

This consists of capital receipts and payments. It also incorporates transactions in the public account. Capital
receipts are loans raised by the government from the public which are called market loans, borrowings by the
government from the Reserve Bank and other parties through sale of treasury bills, loans received from foreign
bodies and governments, and recoveries of loans granted by the central government to state and union territory
governments and other parties.
 A government budget is an annual financial statement which outlines the
estimated government expenditure and expected government receipts or
revenues for the forthcoming fiscal year. Depending on the feasibility of these
estimates, budgets are of three types -- balanced budget, surplus budget and
deficit budget. Mentioned below are brief explanations of these three types of
budgets:

BALANCED BUDGET
A government budget is said to be a balanced budget if the estimated
government expenditure is equal to expected government receipts in a particular
financial year. They believed the government’s expenditure should not exceed
their revenue. Though an ideal approach to achieve a balanced economy and
maintain fiscal discipline, a balanced budget does not ensure financial stability
at times of economic depression or deflation.

SURPLUS BUDGET
A government budget is said to be a surplus budget if the expected government
revenues exceed the estimated government expenditure in a particular financial
year. This means that the government’s earnings from taxes levied are greater
than the amount the government spends on public welfare. A surplus budget
denotes the financial affluence of a country. Such a budget can be implemented
at times of inflation to reduce aggregate demand.
DEFICIT BUDGET
A government budget is said to be a deficit budget if the estimated government
expenditure exceeds the expected government revenue in a particular financial
year. Especially helpful at times of recession, a deficit budget helps generate
additional demand and boost the rate of economic growth. Here, the
government incurs the excessive expenditure to improve the employment rate.
This results in an increase in demand for goods and services which helps in
reviving the economy. The government covers this amount through public
borrowings (by issuing government bonds) or by withdrawing from its
accumulated reserve surplus.

Here are a few reasons why it’s important for the government to have a budget:

Proper resource pool allocation

When it comes to budgeting, identifying areas of weakness helps the
government to allocate resources in a useful and sustainable manner. This is one
of the most fundamental objectives behind framing a government budget. It’s
important for the government to ensure that funds reach where it’s required the
most.

Ensuring economic growth

A budget allows the government to regulate the imposition of taxes in various
sectors. Investment and expenditure are some of the most prominent factors
contributing to the growth of a nation’s economy. The government can
encourage people to emphasize more on savings and investments by providing
tax rebates and subsidies.

Growth of business and trading

Businesses and enterprises look forward to the government budget as resources
being allocated to various sectors are revealed. The government can encourage
business owners to revise their policies accordingly and contribute to the
country’s economic prosperity.
Mitigating economic divide
Economic disparity and inequality is an imminent threat to any country’s
economy. The government can address these kinds of threats by introducing
public and economic welfare policies for the underprivileged sections of the
society through the budget.

Administering Operation of PSUs

Industries operating in the public sector contribute immensely to the country’s
economy by providing employment to a lot of people and generating revenues.
A budget helps the government focus appropriately on companies in the public
sector by introducing policies to aid their growth.

INTERIM BUDGET
The term ‘interim’ means temporary or for the time being. The Interim Budget
contains detailed documentation of every expense to be incurred and every
rupee to earned through taxes in the coming few months until the new
government comes to power. During the transition period, the ruling
government needs the Parliament’s approval to extract money from the
Consolidated Fund of India, where the government puts all its revenue.
When the election is around the corner, it is unrealistic for the ruling
government to launch a regular Annual Budget. So it gets passed as an Interim
Budget, consisting of full estimates of the revenue and expenditure and also
some policy measures too.
An Interim Budget differs from the Annual Budget in many ways. As
mentioned above, a Budget has two parts – the report of expenses and income in
the previous year and the proposed expenses and income generation in the
coming year.
As for the Interim Budget, the first part will remain the same. However, the
second part will contain documentation of only basic expenses until the
election. According to the Electoral Commission Regulations, the current
government is not allowed to introduce any major policy changes, new rules or
amendments that can influence the vote banks unfairly.
This year, the government presented the Interim Budget, also known as ‘Vote
on Account’ as it is close to the end of its term. An interim budget is usually
passed by the Lok Sabha without discussion.

Vision proposed by Interim Budget 2019 for 2030

India has become fastest growing economy

• By 2024, India will have housing for all, free from corruption, communalism
and nepotism.
• India has now become the 6th largest economy in the world.
• Inflation has been brought down to 4.1 percent; average inflation stands at 4.6
percent
• The fiscal deficit has been brought down to 3.1 percent.
• The Current Account Deficit has also been brought down.
• India attracted maximum Foreign Direct Investment (FDI) in 2018-19,
amounting to USD 239 billion. This has been possible through rapid
liberalisation of FDI policy.
• In last 5 years (2014-2018), India witnessed structural reforms by introducing
Goods & Services Tax (GST) and other taxation reforms.

Banking Reforms
• A number of measures have been undertaken for clean banking in recent years
such as through the Insolvency and Bankruptcy Code (IBC)
• Re-capitalisation of PSU banks was done.
• Recently, the Prompt Corrective Action (PCA) restrictuion was removed from
three banks, namely - Bank of India, Maharashtra Bank, and Oriental Bank of
Commerce (OBC).
Poor and backward classes
• Rs 60000 crore were allocated for the Mahatma Gandhi National Rural
Employment Gurantee Act (MGNREGA)
• 10 percent reservation granted to the economically backward among the
general category.
• Rs 19000 crore were allocated for Pradhan Mantri Gram Sadak Yojana for
construction of more rural roads.
• Over 1.53 crore houses were constructed in the last five years under the
Pradhan Mantri Awas Yojana (PMAY) .
• By March 2019, every household will have electricity under the Saubhagya
yojana.
• The Aspirational Districts Programme is providing targeted development to
the 115 most backward districts of the country.

Health Sector
• India launched the world's largest healthcare programme, Ayushman Bharat –
Pradhan Mantri Jan Arogya Yojana to provide medical treatment for 50 crore
people. As many as 10 lakh people have been benefitted so far under the
scheme.
• Many poor people are able to get affordable medicines through the Jan
Aushadhi Kendra.
• There are 21 All India Institute of Medical Sciences (AIIMS) functioning
currently in India. Of these 21, 14 AIIMS were set up under the present
government.
• The 22nd AIIMS will come up in Haryana.

Agriculture
• Government undertook various initiatives to boost farmers’ income. It ensured
that the Minimum Support Price (MSP) is at least 50 percent percent of the
produce and introduced pro-farmers policy.
• Rs 750 crore was allocated for the Rashtriya Gokul Mission.
• It announced to set up the ‘Rashtriya Kamdhenu Aayog’ for production and
productivity of cows.
• A separate ‘Department of Fisheries’ will be created to boost the fisheries
sector.
• Under the Kisan Credit Card scheme (KCC), 2 percent interest subversion will
be given for farmers pursuing animal husbandry and an additional 3 percent
interest subversion will be given for those who repay the loan in time.
• Farmers, affected by severe natural calamities, will be provided the benefit of
 interest subvention of 2 percent and prompt repayment incentive of 3 percent
for the entire period on timely repayment of their loans.

Pradhan Mantri Kisan Samman

Nidhi (PM-KISAN)
Considering that the declining prices of agricultural commodities and food
inflation led to reduced returns for farmers, the Government felt the need for
structured income support for farmers to procure seeds and labour and
introduced a new scheme was for farmers’ welfare.
The Scheme ‘Pradhan Mantri Kisan Samman Nidhi’ will provide assured
income to small and marginal farmers. Vulnerable farmers with 2 hectares of
land will be given Rs 6000 per year. The amount will be transferred directly
into their account in 3 equal installments.
The complete expenditure of Rs 75000 crore for the scheme will borne by the
Union Government.

Wages, salaries and pensions

• The membership of Employees' Provident Fund Organisation (EPFO) has
gone up by 2 crore in five years.
• In last five years, all classes of workers saw a 42 percent increase in wages.
• The Seventh Pay Commission recommendations were implemented swiftly.
• The New Pension Scheme (NPS) has been liberalised.
• Maximum ceiling of the bonus given to the labourers has been increased from
Rs 3500 to Rs 7000 per month and the maximum ceiling of the pay has been
increased from Rs 10,000 to Rs 21,000 per month.
• The ceiling of payment of gratuity has been enhanced from Rs 10 lakhs to Rs
20 lakhs.
• In the event of death of a labourer during service, the amount to be paid by
EPFO has been increased from Rs 2.5 lakh to Rs 6 lakh.
• The Employee's State Insurance (ESI) cover limit has been increased to Rs
21000 from Rs 15000 per month.
• The minimum pension was also increased to Rs 1000.
'Pradhan Mantri Shram-Yogi Maandhan': Mega pension scheme for
unorganised sector
 Considering that half of the GDP comes from the unorganised sector, Finance
Minister announced the launch of the mega pension scheme for the
unorganised sector workers with income of less than Rs 15,000.
 Under the scheme, the workers will be able to earn Rs 3000 after attaining the
age of 60 years.
 The budget allocates the expenditure of Rs 500 crore for the scheme.
 A worker joining the pension yojana at 18 years, will have to contribute Rs 55
per month only.

Women development
• The government stood up to into manifesto and provided the promised clean
fuel for cooking under the Ujjwala Yojana. The government has already given 6
crore free LPG connection.
• More than 70 percent of beneficiaries of Pradhan Mantri Mudra Yojana are
women.
• Pradhan Mantri Matru Vandana Yojana for pregnant women has provided
financial support to women while empowering them to participate in work.

Youth Development
• Various scheme of the government have led to the youth development in the
country. These schemes are Pradhan Mantri Mudra Yojana, Startup India, and
Stand Up India.
• The 16.53 crore loans have been disbursed under Pradhan Mantri Mudra
Yojana and Rs 7.23 lakh crore have been disbursed through the scheme.

MSME SECTOR Ministry of Micro, Small & Medium Enterprises

• A scheme of sanctioning loans upto 'Rs 1 crore in 59 minutes' has been
launched. GST-registered MSME units will get 2 percent interest rebate on
incremental loan of Rs 1 Crore.
• Job seeker has become job giver.
• 25 percent of sourcing for government projects will be now from the MSME
sector, of which three percent will be from women entrepreneurs.
• MSMEs can now sell their products on the Government eMarketplace (GeM),
a one-stop-shop to facilitate online procurement of common use goods.

Other announcements
• A Welfare Development Board will be created for nomadic and semi-nomadic
community. A Committee under NITI Aayog will be formed to identify these
committees
• National artificial intelligence portal will be developed soon

Defence Sector
• The government has already disbursed Rs. 35000 crore under One Rank One
Pension (OROP).
• Military Service Pay has also been hiked substantially.
• The Defence Budget will cross Rs 3 lakh crore for the first time in 2019-20.

Infrastructure Sector
• India's aviation industry has seen a high in the past. India now has more than
100 operational airports with the inauguration of the Pakyong airport in Sikkim.
• Due to 'UDAAN Scheme', ordinary citizens are also travelling by air now.
• India has become the fastest highway developer in the whole world with
almost 27 km of highway built everyday.
• Projects stuck for decades like the Eastern Peripheral Highway around Delhi
or the Bogibeel rail-cum-road bridge in Assam and Arunachal Pradesh have
been completed.
• The construction of rural roads has also tripled. Around 15.8 lakh out of a total
17.84 lakh habitations have been connected with pucca roads under PMGSY.
PMGSY allocated Rs 19,000 crore in 2019-20
• The flagship programme of Sagarmala along the coastal areas of the country
will develop ports for faster handling of import and export cargo.
• For the first time, container freight movement has started on inland waterways
from Kolkata to Varanasi.
• The Indian Railways has experienced the safest year in its history. All
unmanned level crossings on broad gauge network have been completely
eliminated.
• The introduction of the first indigenously developed "Vande Bharat Express"
will give the Indian passengers world class experience with speed, service and
safety.
• The capital support from the budget for railways is proposed at Rs 64,587
crore in 2019-20 (BE).
• The railways’ overall capital expenditure programme is of Rs 1,58, 658 crore.
• The people of North East have also received significant benefits of
infrastructure development. Arunachal Pradesh came on the air map recently
and Meghalaya, Tripura and Mizoram have come on India’s rail map for the
first time.
• The allocation for the North Eastern Areas is being proposed to be increased
by 21 percent to Rs 58,166 crore in 2019-20 over 2018-19.

Digital India
• India is now leading the world in consumption of mobile data.
• The monthly consumption of mobile data increased by 50 percent in the last
five years.
• The cost of data and calling in India is possibly the lowest in the world.
• More than 3 lakh service centres employ over 12 lakh people today under the
Digital India push.
• The government now aims for 1,00,000 digital villages in the next five years.
• The number of mobile manufacturing companies increased from 2 to 268 in
past five years, thereby generating more jobs in India.

Financial Reforms
• Around 34 crore Jan Dhan accounts were opened during 2014-18.
• The Budget speech also mentioned the government's big financial decision of
demonetisation. The move succeeded in eliminating the black money.
Demonetisation and other moves were able to bring back Rs 1,36,000 crores of
cash to banks.
• More than one crore people filed income tax returns post demonetisation.
• Over 338000 shell companies were detected and their directors were
disqualified.

Fiscal Expenditure
• The Interim Budget pegs the Fiscal Deficit at 3.4 percent.
• Total expenditure rises from revised estimates Rs 24,57,235 crore in 2018-19
to Rs 27,84,200 crore in 2019-20, a rise of Rs 3,26,965 crore.
• Capital Expenditure for 2019-20 is estimated to be Rs 3,36,292 crore.
• Centrally Sponsored Schemes (CSS) are proposed were allocated with Rs
3,27,679 crore in 2019-20 as against Rs 3,04,849 crore in 2018-19 revised
estimates.
• Allocation for National Education Mission is being increased from Rs 32,334
crore in 2018-19 revised estimates to Rs 38,572 crore in 2019-20.
• Allocation for Integrated Child Development Scheme (ICDS) is being
increased from Rs 23,357 crore in 2018-19 revised estimates to Rs 27,584 crore
in 2019-20.
Taxation Reforms

• The direct tax collection has been increased substantially. The number of
returns filed have increased from 3.79 crore to 6.85 crore, showing 80 percent
growth in tax base since four years. In 2018-19, 99.54 percent of the income-tax
returns were accepted as they were filed.
• From now on, all returns will be processed in 24 hours and refund will be
initiated at the earliest.
• The entire process will be done in the back-end so that a tax payer need not
interact with an official, thus, reducing time.
• With the efforts of the GST Council, the Goods & Services Tax (GST)
resulted in increased tax base and increased collection.
• Cinema goers who were subjected to multiple taxes up to 50 percent are
mostly paying much lower tax at 12 percent now.
• Exemptions from GST for small businesses has been doubled from Rs 20 lakh
to Rs 40 lakh.
• Businesses comprising over 90 percent of GST payers will be allowed to file
quarterly return soon.

• The GST collection for January 2019 is estimated at Rs 1.03 lakh crore.

• The government abolished the duties on 36 capital goods. Indian Customs is

introducing full digitization.