As Finance Minister Nirmala Sitharaman gears up to present her third Union Budget on 1 February, one needs to be aware of certain finance terms to understand what she plans to propose to the citizens on the big day.
One of the unique aspects of Union Budget 2021–2022 is that it’s not going to be a voluminous tome—the Finance Ministry will be going digital.
In other words, unlike the previous years, budget documents will not be printed this year following the COVID-19 protocol; these will instead be distributed electronically to the MPs.
Previously, a ceremony marked the launch of a printing exercise for the budget. This will be the first time since the presentation of Independent India's first budget on 26 November 1947 that the documents containing the income and expenditure statement of the Union government along with the Finance Bill, detailing new taxes and other measures for the new financial year, will not be printed.
While the countdown for Union Budget 2021 has already begun, we need to first unpack its components. It is divided in two parts: Revenue Budget and Capital Budget. Below is a breakdown of what Revenue Budget is and entails.
According to the Ministry of Finance, Revenue Budget comprises the government's revenue receipts (tax and non-tax revenues) and the expenditure met from these revenues.
Tax revenues comprise proceeds of taxes and other duties levied by the Centre. 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.
The non-tax receipts mainly comprise interest and dividend on investments made by the government, fees, and other receipts for services rendered by the government.
Revenue expenditure is for the smooth functioning of government departments, and for rendering various services, making interest payments on debt, meeting subsidies, grants in aid, etc.
Broadly speaking, the expenditure that does not result in the creation of assets for the Government of India is treated as revenue expenditure. All grants are given to the state governments/union territories, and other parties are also treated as revenue expenditure even though some of the grants may be used for the creation of capital assets.