After independence India opted for a centrally planned economy.
The process of formulation and direction of the 5 year plans is carried out by the Planning Commission headed by the PM as its chairperson.
India’s mixed economy combines features of both capitalist market economy and the socialist command economy.
The public sector generally covers areas which are deemed too important or not profitable enough to leave to the market including services as railways and the postal system.
India’s public expenditure is classified as development expenditure and non development expenditure.
Development expenditure comprises:
Central plan expenditure
Central assistance
The above can further be divided into capital expenditure and revenue expenditure.
Central Plan expenditure
Allocated to development schemes outlined in the plans of the central government and public sector undertakings.
Central assistance:
Refers to financial assistance and developmental loans given for plans of the state governments and union territories.
Non developmental capital expenditure comprises capital defense expenditure, loans to public enterprises, states and union territories and foreign govts.
Non developmental revenue expenditure comprises revenue defense expenditure, administrative expenditure, subsidies, debt relief to farmers, postal deficit, pensions, social and economic services (education, health, agriculture, science and technology), grants to states and union territories and foreign govts.
Public receipts
3 – tier tax structure.
The constitution empowers:
1. The Union govt. to levy Income tax, tax on capital transactions (wealth tax, inheritance tax), sales tax, service tax, customs and excise duties.
2. The State govt. can levy sales tax on intra state sale of goods, tax on entertainment and professions, excise duties on manufacture of alcohol, stamp duties on transfer of property, collect land revenue.
3. Local Govt. is empowered by the state govt. to levy property tax, Octroi, charges for public utilities like water supply, sewage etc.
The non tax revenues of the central govt. come from fiscal services interest receipts, public sector dividends etc.
Non tax revenues of the state are grants from the central govt, interest receipts, dividends and income from the general economic and social services.
General Budget
The Finance Minister of India presents the annual union budget in the Parliament on the last working day of February. The Budget has to be passed by the Lok Sabha before it can come into effect on April 1.
The process of formulation and direction of the 5 year plans is carried out by the Planning Commission headed by the PM as its chairperson.
India’s mixed economy combines features of both capitalist market economy and the socialist command economy.
The public sector generally covers areas which are deemed too important or not profitable enough to leave to the market including services as railways and the postal system.
India’s public expenditure is classified as development expenditure and non development expenditure.
Development expenditure comprises:
Central plan expenditure
Central assistance
The above can further be divided into capital expenditure and revenue expenditure.
Central Plan expenditure
Allocated to development schemes outlined in the plans of the central government and public sector undertakings.
Central assistance:
Refers to financial assistance and developmental loans given for plans of the state governments and union territories.
Non developmental capital expenditure comprises capital defense expenditure, loans to public enterprises, states and union territories and foreign govts.
Non developmental revenue expenditure comprises revenue defense expenditure, administrative expenditure, subsidies, debt relief to farmers, postal deficit, pensions, social and economic services (education, health, agriculture, science and technology), grants to states and union territories and foreign govts.
Public receipts
3 – tier tax structure.
The constitution empowers:
1. The Union govt. to levy Income tax, tax on capital transactions (wealth tax, inheritance tax), sales tax, service tax, customs and excise duties.
2. The State govt. can levy sales tax on intra state sale of goods, tax on entertainment and professions, excise duties on manufacture of alcohol, stamp duties on transfer of property, collect land revenue.
3. Local Govt. is empowered by the state govt. to levy property tax, Octroi, charges for public utilities like water supply, sewage etc.
The non tax revenues of the central govt. come from fiscal services interest receipts, public sector dividends etc.
Non tax revenues of the state are grants from the central govt, interest receipts, dividends and income from the general economic and social services.
General Budget
The Finance Minister of India presents the annual union budget in the Parliament on the last working day of February. The Budget has to be passed by the Lok Sabha before it can come into effect on April 1.