BUDGET PREPARATION
CHAPTER-1
INTRODUCTION
A budget is a quantitative expression of a plan for a defined period of time. It ma in!lude
planned sales volumes and revenues" resour!e quantities" !osts and expenses" assets" lia#ilities
and !as$ flo%s. It expresses strate&i! plans of #usiness units" or&ani'ations" a!tivities or
events in measura#le term.
Union Bud&et (eeps t$e a!!ount of t$e &overnment)s finan!es for t$e fis!al ear t$at runs
from *st April to +*st ,ar!$.
Definition: A!!ordin& to Arti!le **- of t$e Indian .onstitution" t$e Union Bud&et of a ear"
also referred to as t$e annual finan!ial statement" is a statement of t$e estimated re!eipts and
expenditure for t$at ear
Description: Union Bud&et (eeps t$e a!!ount of t$e &overnment)s finan!es for t$e fis!al ear
t$at runs from *st April to +*st ,ar!$. Union Bud&et is !lassified into Revenue Bud&et and
.apital Bud&et. Revenue #ud&et in!ludes t$e &overnment)s revenue re!eipts and expenditure.
T$ere are t%o (inds of revenue re!eipts / tax and non/tax revenue.
Revenue expenditure is t$e expenditure in!urred on da to da fun!tionin& of t$e
&overnment and on various servi!es offered to !iti'ens. If revenue expenditure ex!eeds
revenue re!eipts" t$e &overnment in!urs a revenue defi!it
.apital Bud&et in!ludes !apital re!eipts and paments of t$e &overnment. 0oans from pu#li!"
forei&n &overnments and RBI form a ma1or part of t$e &overnment)s !apital re!eipts. .apital
expenditure is t$e expenditure on development of ma!$iner" equipment" #uildin&" $ealt$
fa!ilities" edu!ation et!. 2is!al defi!it is in!urred %$en t$e &overnment)s total expenditure
ex!eeds its total revenue.
1
AIMIT
BUDGET PREPARATION
ETYMOO!Y
A #ud&et 3derived from old 2ren!$ %ord bougette" purse4 is a quantified finan!ial plan for a
fort$!omin& a!!ountin& period.
A #ud&et is an important !on!ept in mi!roe!onomi!s" %$i!$ uses a #ud&et line to illustrate
t$e trade/offs #et%een t%o or more &oods. In ot$er terms" a #ud&et is an or&ani'ational plan
stated in monetar terms.
T$e #ud&et %as first introdu!ed in India on 5 April" *678 # t$e East/India .ompan to
t$e Britis$ .ro%n. Pre/independen!e finan!e minister" 9ames :ilson presented t$e #ud&et in
*678.
One %ee( prior to t$e dis!losure" pu#lis$ers of t$e #ud&et under t$e finan!e ministr" are (ept
isolated from t$e press and ot$er sour!es.
Earlier #ud&et papers %ere printed in Ras$trapati B$avan. T$e printin& venue %as s$ifted to
,into Road in Ne% Del$i. ;in!e *
CHAPTER-1
INTRODUCTION
A budget is a quantitative expression of a plan for a defined period of time. It ma in!lude
planned sales volumes and revenues" resour!e quantities" !osts and expenses" assets" lia#ilities
and !as$ flo%s. It expresses strate&i! plans of #usiness units" or&ani'ations" a!tivities or
events in measura#le term.
Union Bud&et (eeps t$e a!!ount of t$e &overnment)s finan!es for t$e fis!al ear t$at runs
from *st April to +*st ,ar!$.
Definition: A!!ordin& to Arti!le **- of t$e Indian .onstitution" t$e Union Bud&et of a ear"
also referred to as t$e annual finan!ial statement" is a statement of t$e estimated re!eipts and
expenditure for t$at ear
Description: Union Bud&et (eeps t$e a!!ount of t$e &overnment)s finan!es for t$e fis!al ear
t$at runs from *st April to +*st ,ar!$. Union Bud&et is !lassified into Revenue Bud&et and
.apital Bud&et. Revenue #ud&et in!ludes t$e &overnment)s revenue re!eipts and expenditure.
T$ere are t%o (inds of revenue re!eipts / tax and non/tax revenue.
Revenue expenditure is t$e expenditure in!urred on da to da fun!tionin& of t$e
&overnment and on various servi!es offered to !iti'ens. If revenue expenditure ex!eeds
revenue re!eipts" t$e &overnment in!urs a revenue defi!it
.apital Bud&et in!ludes !apital re!eipts and paments of t$e &overnment. 0oans from pu#li!"
forei&n &overnments and RBI form a ma1or part of t$e &overnment)s !apital re!eipts. .apital
expenditure is t$e expenditure on development of ma!$iner" equipment" #uildin&" $ealt$
fa!ilities" edu!ation et!. 2is!al defi!it is in!urred %$en t$e &overnment)s total expenditure
ex!eeds its total revenue.
1
AIMIT
BUDGET PREPARATION
ETYMOO!Y
A #ud&et 3derived from old 2ren!$ %ord bougette" purse4 is a quantified finan!ial plan for a
fort$!omin& a!!ountin& period.
A #ud&et is an important !on!ept in mi!roe!onomi!s" %$i!$ uses a #ud&et line to illustrate
t$e trade/offs #et%een t%o or more &oods. In ot$er terms" a #ud&et is an or&ani'ational plan
stated in monetar terms.
T$e #ud&et %as first introdu!ed in India on 5 April" *678 # t$e East/India .ompan to
t$e Britis$ .ro%n. Pre/independen!e finan!e minister" 9ames :ilson presented t$e #ud&et in
*678.
One %ee( prior to t$e dis!losure" pu#lis$ers of t$e #ud&et under t$e finan!e ministr" are (ept
isolated from t$e press and ot$er sour!es.
Earlier #ud&et papers %ere printed in Ras$trapati B$avan. T$e printin& venue %as s$ifted to
,into Road in Ne% Del$i. ;in!e *