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2. How The Budget Is Prepared
The ‘Annual Financial Statement’, laid before both the Houses of
Parliament constitutes the Budget of the Union Government.
This statement takes into account a period of one financial year.
The financial year commences in India on 1st April each year. This
statement is called the union budget, which contains broadly, the
budget speech, a breakdown of the detailed spending proposals
of each ministry, as well as revenue raising proposals.

3. • The Union Budget is an annual statement of how much
money the Government expects to raise and how it will spend
the money in the next financial year
• The Budget uses two different sets of classifications — Plan vs
Non-plan and Capital vs Revenue expenditure
• Capital Expenditure either creates assets or reduces liabilities
• Revenue Expenditure does not create assets

4. • Expenditure on schemes and projects covered by the five-
year Plans is known as Plan Expenditure
• Ongoing expenditure by the government not covered by
the Plans is put under Non Plan Expenditure
• The Planning Commission is the main agency through
which all discussions on the Plan Expenditure is held
• The excess of total government expenditure over total
receipts is called the fiscal deficit and is funded by
borrowing

5. • The difference between revenue receipts and expenditure
is called the revenue deficit
•Part A of the Budget speech deals with general economic
survey of the country while Part B relates to taxation
proposals
•The Budget of the Indian Railways is presented separately
to Parliament

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