2019 will be the year of the 17th Lok Sabha. But before we plunge into election season (Apr & May 2019), we need to prepare ourselves for this year’s Budget. Through our budget series, we shall inform you about the expectations we have and help you unravel some budget jargons. Post 1 Feb 2019 we shall share our detailed analysis of the budget as well.
To start with, let’s look at some terms you will hear about in the run up to Budget 2019
An interim budget is prepared to give the current government spending rights till the next government is chosen. The tenure of the current Lok Sabha (16th) ends on 26 May 2019. Every budget gives the government spending rights only till 31 March. Interim budgets extend this window till the new government assumes office. Interim Budget is an in-principle approval of the expenses that the government can undertake in the coming months.
Under Article 266 of the Constitution of India, all revenues received by the Government of India and all its expenditures will be routed through the Consolidated Fund of India.
Any emergency expenditure is met out of the Contingency Fund of India & any other receipt / expenditure not forming part of the Consolidated Fund forms part of the Public Account of India.
There are 3 types of deficits.
- The excess of total expenditure over its receipts (excl. borrowings) is termed as Fiscal Deficit.
- The excess of revenue expenditure over revenue receipts is Revenue Deficit
- When interest payments are reduced from Fiscal Deficit, we get Primary Deficit.
Shrinking deficits are good for the economy. Fiscal Deficit is usually described as a percentage of Gross Domestic Product. The Fiscal policy strategy of 2018 estimated that the target shall be 3.3% of GDP. Tepid growth in indirect tax collections, welfare schemes to farmers and lower disinvestments has pushed the actual deficit to 3.5%. The plan for 2019-20 will be unveiled in the budget.
2018 Budget Profile as below