What is budget?
The term "Budget" is derived from the French work "Bougette" meaning purse.It generally refers to a list of all proposed incomes and expenses of the Government.
Under Article 202(1) of the Constitution of India, a statement of the estimated receipts and expenditure of the stte has to be laid before the legislature in respect of every financial year. This statement is known as "Annual Financial Statement" (AFS) or popularly known as Budget.
In Indian federation, budget is having two layers - State Budget and Central Budget. Central Government presents its budget on the last of February every year.
However, the State Governments do not follow any specific date. Recently there is an attempt to have uniform budget system for all the third tiers of Local Government in country.
Budget of a State Government is generally presented in the Legislative Assembly in last week of February or first week of March every year.
Why budget is important?
Budget is not merely a financial statement of the State. It reflects Government's intention to spend available resources for the development of the State. It affects almost every sector of the economy and the population. Budget is an important tool which enables the government to financially translate many of its commitments through the annual and five year plans. It also indicates whether the manifestoes of the ruling political parties will be fulfilled.
Monitoring the priorities of public budget by the civil society facilitates the citizens to hold the government accountable.
Who prepares the Government budget?
The Finance Department is the nodal department for consolidation and finalization of the budget prepared at the district level. Finance Department is responsible for management of finances of the State Government starting from mobilization of resources through raising Tax and Non-Tax Revenue, borrowing from different sources like internal debt, Small Savings and Provident Fund etc.
to efficient use of resources through formulation of Annual Budget and execution of Budget.
Is Government's budget making process participatory?
Though India is a democratic country but the process of budget preparation is not open to citizens. There is no such formal mechanism in the country or its states that invites citizens to participate in the budgeting process.
Despite a number of acts and policies on decentralization, the state budget making process continues to remain a secret bureaucratic exercise.
Is there any scope for public consultation before and/or budget preparation?
Public consultation in budget process can be distinguished as pre-budget consultation and consultation in post-budget phase. The pre-budget consultation generally takes place every year when the Finance Minister (FM) initiates the process of meeting various stakeholders from the first week of December to till the end of January.
During this period, the FM generally meets the industry and commerce lobby groups, FICCI, ASSOCHAM and CII. Some other stakeholders who meet the FM include the RBI Governor, representatives of the trade unions, Congress party office bearers, farmers and the agriculturists.
The FM's customary list is also extended to the State's Finance Ministers, exporters and also experts from electronics, IT and financial sectors.
But in the run up to Union Budget 2010-11, the FM has started meeting the CSO leaders for the first time.
Government of Odisha for the first time in 2012 started organizing pre-budget consultation as the first state in India.
Finance Department of Odisha organizes a two day pre-budget consultation involving civil society organizations, media, industrialist, academics, economists, researchers, trade and commerce representatives, ministers and MLAs.
How can a common man place his/her demands to be prioritized in State budget?
Government's budget undergoes four different stages viz., formulation, enactment, implementation and auditing.
During formulation, budget proposal from various departments are aggregated and merged by the Ministry/ Department of Finance.
As specified in the Odisha Budget Manual, the State's budget preparation begins with the submission of budgets by the Drawing and Disbursement Officers (DDOs) who are based at district and sub district level.
Though as per Odisha Budget Manual 1963 common people do not have any scope to be involved in State Budget making process. However, they can submit their collective written demands concerning their constituency to their respective DDOs.
Apart from the DDOs the Members of Legislative Assembly (MLA) of concerned areas can also be submitted the demands.
How a development issue of a particular area can be addressed through budget?
The issues of a particular areas can be taken up to the local DDOs or to the concerned MLA of that particular constituency by the local people in written form as their demands during the formulation period (mentioned above) before August of every financial year.
Financial year: Financial year which is also known as Budget Year starts from April to March every year. Each financial year is, therefore, spread over parts of two calendar years, The period of financial year is continuing from April to March in India since 1867. The financial year is varies from one country to another.
How can common people know about the state budget or the allocation under different programmes/ schemes and overall state budget?
Every year the State Government publishes a range of budget documents. These documents are available in the official website of the state Government (http://www.odisha.gov.in/finance/Budget.asp?GL=Budget&PL=1&TL=1&FL=1)
What are the different sources of money for Govt. to be allocated during the preparation of State Budget?
State government has four sources of revenue, namely, - tax revenue, non-tax revenue, grants-in-aid from Government of India and state's share of union taxes and duties. The tax revenue plays a vital role in the budgeting exercise of the state.
Under tax revenue the prominent sources in order of higher revenue collections include sales tax, excise, tax on goods, tax on vehicles, stamp duty, electricity duty, tax on passengers and land revenue. Besides, miscellaneous taxes in the shape of tax on professions, trade, selling and employment, entertainment duty and advertisement, road tax and tourist tax are charged.
The non-tax revenue is largely dependent on collection of fee from the consumers on account of supply of goods and services like electric energy, drinking water, irrigation facilities, exploitation of forest wealth, charges of health services, mining, etc. The grant-in-aid from the central government and the state's share of union taxes and duties are the other main sources of income of the state.
Additionally, the state Government raises loans by issue of Public notifications, treasury bills (internal debt) and loans is being obtained from the foreign governments and international institution (external debt).
Disinvestment (sale from the government, partly or fully, of a government-owned enterpris) is also a potential source of resource raised by the Government to meet general/specific needs of the State.
How does the Government account funds?
Accounts of Government are kept in three parts:-
1. Consolidated Funds
All revenues received by the Government through taxes like income tax, central excise, customs and other receipts, all loans receive by the Government, are credited into this account. All expenditure of the Government is incurred from this fund and no amount can be withdrawn from this fund without authorization .
2. Contingency Funds
This fund which has a fixed amount of money placed at the disposal of the Governor who authorizes expenditure from it during emergencies. Although prior approval of the legislature is not needed, the expenditure is made in anticipation of post-facto approval by the legislature.
3. Public Account
Public account consists of those funds which do not belong to the Government. Government acts as a banker. These include transactions relating to Provident Funds, Small saving collections, other deposits etc. The amount received in the public account belongs to the public and not the Government. However, the government as the custodian of the fund enjoys the right to use it for development purposes. Normally, the Government is duty bound to honor the claims of individuals who wish to get their money back. Authorization of the legislature is not required for payments from the public account.
Is there any mechanism to verify funds voted in the legislature/ allotted in budget are being utilized properly?
Audit is the process which ensures that the funds voted in the legislature have been utilized for the purpose intended and that the funds authorized to be raised through taxation and other measures have been assessed, collected and credited to government properly. The audit examines to ascertain the final account represents a complete and true statement of the financial transaction. Audit report brings out if there is any wastefulness in public administration. The fundamental abject of the audit is to secure real value for the taxpayer's money.