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Budget Basics

Open Budgets India



Budget Speech

The transcript of the speech the Union/State Finance Minister makes while presenting the budget in Parliament/the State Assembly.

Budget at a Glance

Provides a brief overview of total funds raised by the Government (through taxes or borrowings), and how that money is to be spent along with information on the budget deficit/ surplus.

Annual Financial Statement

Similar to the Budget at a Glance but organised in a different way to comply with the requirements set out by Article 112 of the Constitution.

Budget Highlights

This document briefly explains the key features of the Budget, indicating prominent achievements, budget proposals for allocation of funds and the summary of tax proposals.

Expenditure profile

Presents a summary of total expenditure of all the ministries. Also, it presents expenditure according to different categories of interest, i.e., a summary of funds allocated to schemes for women, children, scheduled castes, scheduled tribes and religious minorities.

Expenditure Budget

Presents a detailed breakdown of the expenditure of each ministry.

Demands for Grants/Appropriation Bill

Two documents required under the Constitution, asking Parliament to allocate the stated amount of funds to different ministries and schemes. Parliament votes to pass these two documents.

Receipts Budget

Presents detailed information on how the Government intends to raise money through different sources.

Finance Bill

A Bill presented to Parliament (and voted on) containing various legal amendments to bring into effect the tax changes proposed by the Government.

Memorandum of the Finance Bill

Explains the various legal provisions contained in the Finance Bill, and their implications, in simple language.

Statement of Revenue foregone

This statement shows the revenue impact of various incentives given to different classes of taxpayers. It can also be known as Statement of Revenue Impact of Tax Incentives Under the Central Tax System.

Macro-economic framework

Explains the Government’s assessment of the growth prospects of the economy.

Medium term Fiscal Policy

A statement setting limits on the size of the budget deficits for the next three years, as well as targets for tax and non-tax receipts.

Fiscal Policy Strategy

A statement explaining the Government’s efforts to follow sound fiscal policies and the reasons for any departure from the targets set for deficits, under the FRBM Act.


Main Institutions Involved in The Budgetary Process

Section titled Main Institutions Involved in The Budgetary Process

The section below lists the main institutions involved in The Budgetary Process and outlines their role in the Budget making process.

Finance Commission

Makes recommendations on the magnitude of transfer of resources from the Centre to the States for a period of 5 years. In November 2017, the 15th Finance Commission was constituted to come up with recommendations for the 2020-25 period. It was required to submit two reports.  The first report, consisting of recommendations for the financial year 2020-21, was tabled in Parliament on February 1, 2020. The final report, with recommendations for the 2021-26 period, was submitted in October, 2020.

Comptroller and Auditor General (CAG)

The CAG, an authority established by Article 148 of the Constitution of India, is supposed to be the ‘guardian of the public purse’. It audits all the receipts and expenditure of the Government of India and State Governments, including those of bodies and authorities substantially financed by the government.

The CAG is also the head of the Indian Audit and Accounts Department, the affairs of which are managed by officers of the Indian Audit and Accounts Service. The CAG is also the external auditor of Government-owned corporations and conducts a supplementary audit of government companies, i.e., any non-banking company in which the Union Government has an equity share of at least 51 per cent, or subsidiary companies of existing government companies.
After the financial year ends, the CAG audits the income and expenditure accounts of the government and tables its report in Parliament. Every year, the CAG tables about 40 audit reports in Parliament.

Controller general of Accounts (CGA)

In 1976, the Controller General of Accounts (CGA) was set up to oversee the department-wise accounts of the Union Govt. The major functions of the CGA, which works under the Ministry of Finance, are:

(a) Overseeing the maintenance of adequate standards of accounting by Central Accounts Offices

(b) Stocktaking of the monthly and annual accounts of the Government of India

(c) Administration of rules under Article 283 of the Constitution relating to custody of the Consolidated Fund of India, the Contingency Fund and the Public Accounts.

It also prepares a condensed form of the Appropriation Accounts and the Finance Accounts of the Union Government. The accounts prepared by the CGA are audited by the Comptroller and Auditor General (CAG) of India. These audited accounts are placed before both the houses of Parliament. Article 149 of the Constitution prescribes the duties and powers of the CAG. Article 151 requires the CAG to present reports relating to the accounts of the Union and the States.


Parliamentary oversight of public funds broadly involves two functions:

(a) scrutinising and sanctioning the government’s expenditure and taxation proposals in the Union Budget

(b) examining utilisation of the funds allocated for various activities, through parliamentary committees.

Parliament exerts control over the Budget, too. Three committees are constituted by the Parliament in this regard.

1. Public Accounts Committee: It examines the CAG report and can also look into irregularities that may be brought to its notice or which are of wider public interest.

2. Estimates Committee: It examines proposals and suggests ways in which public expenditure can be incurred in a judicious manner so that the objectives underlying various plans and schemes are effectively achieved.

3. Committee on Public Undertakings: It scrutinises the reports and accounts of public undertakings, which are financed through the Consolidated Fund of India. It also studies CAG reports in this regard and suggests economies, improvements in organisation/management and production that should be undertaken by various undertakings.


Typically, the Lok Sabha decides to hold a detailed discussion on four or five Demands for Grants. The ministries identified for discussion vary every year and are decided by the Business Advisory Committee of the House. This discussion is followed by voting. Demands that have not been discussed and voted on by the last day are ‘guillotined’, i.e. they are voted upon together.

Standing committees

One of the functions of Standing Committees is to scrutinise the allocation of funds to the ministries under their supervision. At present, there are 24 Standing Committees that together oversee the work of all the ministries.

These Committees examine the: 

(a) amount allocated to various programmes and schemes under the Ministry

(b) trends of utilisation of the money allocated to the Ministry. 

To enable this, officials of the Ministry are required to depose before the Committee to respond to queries and provide additional information in connection with the Demands for Grants being examined. While examining a ministry’s expenditure, the Committees may consult or invite views from experts.

Based on these consultations, the Committees submit their reports to Parliament. The Committees’ recommendations are useful for MPs to understand the implications of the proposed expenditure across ministries and enable informed debate before such expenditure is approved.

Estimates committee

The Estimates Committee facilitates Parliament’s control over the expenditure sanctioned and incurred, and over the general policies of the administration. The Committee’s main tasks are to: 

(a) report on improvements and administrative reforms that can be made

(b) suggest alternative policies in order to bring about efficiency in administration

(c) suggest whether the proposed expenditure is within the limits of government policy.

Earlier, this Committee carried out the task of examining proposed estimates of expenditure by various ministries. Since 1993, the Departmentally Related Standing Committees have taken over this function, leaving the Estimates Committee to largely examine the working of certain government organisations.

Public Accounts Committee (PAC)

Since it is difficult and time-consuming for Parliament to discuss each of the CAG reports, the Public Accounts Committee (PAC) is entrusted with examining the findings of the CAG audit reports. The PAC scrutinises whether the government is spending money on the purposes for which Parliament sanctioned the expenditure. While examining the reports, the PAC interacts with officials from the CAG, different ministries and experts. The government responds to every report of the PAC by stating whether various recommendations have been accepted or rejected by it. Based on these responses, the PAC prepares Action Taken Reports and tables them in Parliament.

NITI Aayog

NITI Aayog is a policy think tank of the Government of India, established with the aim of achieving sustainable development goals through cooperative federalism. To this end, it uses a bottom-up approach, by involving State Governments in the economic policy-making process.

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