Sunday, March 02, 2008

Budget Related Questions answered

Hi friends,

I received an email asking me to clarify certain things about the recent budget statement and figures. I am doing my best to answer the queries. The para having an * before it is the query and the para that follows it without an * is my answer. Here I go:

This is with reference to blog post (dt. 01.03.2008). Here you have posted a table depicting various aggregates of Budget 2008.
I had the following queries -

* Point 3 talks about non - tax revenue to the central govt. Could you provide me with an indicative break up of this figure.

If you are looking for actual figures, I recommend that you look at Annual Financial Statement on Receipts. It is just a four page document.

But to give an idea what comprises non-tax revenue, it includes thinks like fiscal services (coinage and mint services), interest and dividend income or profits made by government.

* Similarly, Point 6 is about other capital receipts, so it refers to 'grants' which the central govt. receives or it is pointing at some other source.

Capital receipts includes Public Debt (Internal and External), Recoveries of loans and advances and others. The internal debt comprises of Treasury Bill auctions, Ways and Means advances, Receipts from Market Stabilization Scheme auctions etc. The 'grants' that you are referring to perhaps fall under the 'others' category.

* Point 9 is an aggregate of non-plan expenditure, here I am surprised to see such exorbitant amounts placed under Interest payments, if they are of this magnitude and are foreseeable - then why not classify them under plan expenditure. Further, does Point 14 include any interest payout?

Though your query makes sense to me, I think the reason for it lies in the simple fact that Plan is for a five year period. Whereas Government keeps mobilizing money at times much more than what is budgeted by way of loans depending on circumstances. This makes it hard for it to really plan the interest outgo in advance, over a five year period. That's why it can't plan for such interest outgo. In any case what you plan for interest outgo during a five year plan is separate and will find a mention under the Plan Expenditure head.

* Point 17 (total revenue expenditure) - why doesn't it include Point 11 as interest payment is also of revenue nature only.
Row 10 already includes in it row 11 figures. Read the "of which" in row 10? That means that row 11 is already included.