What is budget?
The core of the budget is called the Annual Financial Statement, the main budget document. Under the
Constitution, a statement of estimated receipts and expenditures of the government of India has to be laid

before the Parliament in respect of every financial year running from April 1
to March 31. This statement shows
the receipts and payments of government under the three parts in which Government accounts are kept:
(1) Consolidated Fund (2) Contingency Fund and (3) Public Account

What is consolidated funds?
All revenues received by the government, loans raised by it, and also its receipts from recoveries of loans
granted by it, form the Consolidated Fund. All expenditure of the government is incurred from the Consolidated
Fund and no amount can be withdrawn from the Fund without authorization from Parliament.

What is contingency fund?
This Fund is placed at the disposal of the President to enable the government to meet urgent, unforeseen
expenditure pending authorization from Parliament. The corpus of the Fund authorization by the Parliament is,
at present, Rs 50 crores.

What is public account?
Besides the normal receipts and expenditure of the government related to the Consolidated Fund, certain other
transactions enter government accounts for of which government acts more as a banker. For example,
transactions relating to provident funds, small saving collections, other deposits, etc. The money thus received
is kept in the Public Account. As the money does not belong to the government and has to be paid back
sometime to the person and authorities who deposited it, no parliamentary approval for the payment from the
Public Account is required.

What is 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 government receipts, mainly interest and dividend on investments, fees and receipts
for other services rendered by the government. Revenue expenditure is expenditure for the normal running of
the government departments and various services, interest charges on debt incurred by the 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 grants may be for the creation of assets.

What is 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
government from R.B.I. and other parties through sale of Treasury bills, loans received from foreign bodies and
government and recoveries of loans granted by Central government to State and union Territory governments
and parties.
Capital payments consists of capital expenditure on acquisition of assets like land, buildings, machinery,
equipment, as also investment in shares, loans and advances granted by Central government to State and
Union Territory governments, government companies, corporations and other parties.

What are demands for grants?
This is the form in which estimates of expenditure in the Annual Financial Statement are required to be voted
in the Lok Sabha are submitted. Generally, one demand for grant is presented in respect of each ministry or
department. However, for large industries and departments more than one demand is presented.