Budget Matters

Smt. S. Rupa

The Business Rules

The Finance Department has developed four generic Codes and Manuals 1. 2. 3. 4. A.P. A.P. A.P. A.P. Treasury Code Financial Code Accounts Code Budget Manual

Budget Manual
AP Budget Manual outlines the process for formulation of the budget, changes to the budget execution during the year, in particular, it outlines the accountabilities of line Departments in the budget process.

Part - I
a) The Structure of Budget Accounts b) The Budget and Accounting Classification

Part - II

Instructions for the Estimating Officers in Preparation of Budget Estimates

What is Budget?
Under Article 202 of the Indian Constitution Budget is Annual Financial Statement of the State for each financial Year to be laid before the Legislature. A Statement of estimated receipts and expenditure of the state for each financial year is called Annual Financial Statement. Budget means estimated receipts and expenditure.

Why Budget? Integral part of the society Provides road map for financial success and independence Increases socio, economic and political activities: Helps for setting of financial and physical goals Prepares for emergency

What does Budget contain?

1.

Consolidated Fund Article 266 (1) of the constitution enumerates the following as constituting the fund (i) all revenues received by the Government

(ii) all loans raised by the Govt., by issue of treasury bills, loans or ways and means of advances
(iii) all moneys received by Govt., in repayment of loans

Budget Classification
Revenue Account:
The account of current income and Expenditure of the State. The income is derived mainly from taxes and duties, fees for services rendered fines and penalties, revenue from Govt., estates such as forests etc.,

Revenue Account
Receipts Tax Revenue Direct Taxes (Income & ex., Land Revenue Stamps & Reg Others) Indirect Tax (Sales Tax, Excise Duty, Motor Vehicles tax etc.,) Non Tax Revenue Interest, dividends, Social Grants in aid Expenditure General Services Organs of State- Legislature, Governor, Council of Ministers, Administration of justice and election. Fiscal Services Interest Payments, Administration Services (Public service administration, police, jails, fire finance etc., Social Services Education, Health, Medical & Health Social welfare etc., Economic Services Agriculture, Industry, Irrigation RD etc.,

Capital Account (The account of expenditure of a capital nature such as the construction of buildings, irrigation and electricity works)

Receipts

Expenditure

Open Market Loans External Loans Loans from RBI

General Services Organs of state, Fiscal Services, Pensions, Interest payments, administrative services Social Services Education, Health, Medical & Health, Social Welfare etc., Economic Services Agriculture, Irrigation, Transport, Power etc.,

Loan Account (The account of public debt incurred and discharged and of loans advances made by the State Govt., to local bodies and recovered from them.
Loan Repayments

Loan Receipts

Loans and Advances Open Market operations GoI borrowings

Public Account:

Article 266 (2)

Deposits received from the contractors, merchants and Judicial deposits Funds deposited by local bodies such a PR Institutions, Corporations, Companies and Boards Small savings, PF of Govt., servants Deposits and advances Suspense and Miscellaneous funds

Contingency Fund : Article 267 (2)

Apart from contingency Fund there is another fund called Contingency Fund which shall be at the disposal of the Governor of the State, created with Rs200.00 Crs. It is for emergency unforeseen and unavoidable expenditure.

Structure of Accounts Sect oral Classification

Revenue

receipts Revenue expenditure Capital expenditure Loans & Advances, Contingency Fund Public Account

: 0020 to 1999 : 2011 to 3999 :4011 to 5999 : 6011 to 7999 : 8000 : 8001 to 8999

7 TIER CLASSIFICATION
MAJOR HEAD
(functions of the Govt.,)

SUB MAJOR HEAD MINOR HEAD

(under each function plan or non plan)

--- 4 DIGITS CODE --- 2 DIGITS CODE --- 3 DIGITS CODE --- 2 DIGITS CODE --- 2 DIGITS CODE --- 3 DIGITS CODE --- 3 DIGITS CODE

GROUP SUB HEAD

SUB HEAD (Organization / Programme) DETAILED SUB HEAD
(Nature of expenditure)

SUB DETAILED HEAD

Sl.no

Function

Receipts Heads Revenue Account

Expenditu re Heads Revenue Account 2210

Expenditu Loans & re Advances Account Heads Capital Account 4210 6210

1.

Medical and 0210 public health

2.

Housing

0213

2213

4213

6213

3.

Roads Transport

1055

3055

5055

Budget Preparation

Prescribed Formats sent to Disbursing Officers in July/ August

Grant Major Head/Minor Head Sub Head/ Detailed Head Accounts for BE for the previous current Year Year RE for Current Year BE for the Next Year

Preparation of Number Statements, Budget Estimates and Revised Estimates [Number Statements] A statement detailing particulars of posts in each permanent and Temporary both Gazetted and non-gazetted) monthly pay special pay under 011- pay and 012 allowances Para 16.20.1 of the AP Budget Manual, the Head of the Department and other Estimating Officers are required to submit Number statements to the Finance Department by 1st August every year.

Statement of posts in each permanent and Temporary, both Gazetted and non gazetted HRA,CCA, Encashment of EL, Medical Reimbursement, LTC, Educational concessions, The details of vacant posts and the period likely to be vacant should be indicated. The number statements inrespect of posts under plan , non-plan and grant-in-aid towards salaries should be sent separately in the proforma I, II, & III in Annexure-I prescribed by Fin. Deptt.

Preparation of Budget Estimates Estimated receipts and expenditure under each head of account during a financial year to be presented to the Legislature. It is based on the Departmental Estimates submitted by the HODs and other Estimating Officers. They should prepare their estimates in duplicate in the proforma in duplicate and send one copy to finance department and another to the administrative Department of the Secretariat concerned by 1st October. The Administrative Department will send with their comments with explanatory note to Finance by 15th October every year.

Preparation of Revised Estimates

An estimate of probable receipts and expenditure under each head of account during the course of the year with reference to the actual transaction recorded for the months of the year and anticipated expenditure for the remaining months. It must be very careful in preparing the Revised Estimates as we arrive the closing balance. It is the best guide for the preparation of the next year Budget.

Grant No. MJH/SMJH MH

Accounts 2009-10

Budget Estimate 2010-11

Revised Estimate 2010-11

Budget Estimate 2011-12

Opening balance
II. Revenue Receipts 1.Central Taxes 2.Tax Revenue

3.Non-Tax Rev.
4.Grants-in-aid

III. Capital Receipts 5.Open Market Loans 6.Floating Debt 7.Loans from GOI 8.Other Loans 9.Deposits

Particulars

Accounts 2009-10

Budget Estimate 2010-11

Revised Estimate 2010-11

Budget Estimate 2011-12

Non Plan Expenditure On Revenue Account Of which Interest payments

Capital Disbursements Loans Plan Expenditure

Total Expenditure Revenue Expr Capital Expr. Loans &Advances Capital Disbursements
Overall Transaction Closing Balance Revenue Surplus Fiscal Deficit

The following documents are at presented to the legislature by the finance ministers on the day appointed by the Governor

a) Annual Financial Statement b) Detail Budget Estimates of revenue (Plan & Non- Plan) c) Demands for grants d) Detail estimates of debt account (Receipts and Disbursements) e) Appendix I (Details of Staff) f) Appendix II (Details of Works) g) Provisions for assistants for local bodies h) Budget for expenditure on STs i) Budget for expenditure on SCs

Finance Department consolidates the Revenue and the expenditure by December end and submits to M. Finance for examination.

In Jan, F.M. Prepares financial policy in consultation with the Chief minister Final submission to Cabinet for consideration
After the Cabinet approval, budget is ready for presentation in February to the legislature.

Finance Minister presents budget to the Legislature in the last week of February

General Discussion on Budget Discussion on Demand for Grants Appropriation Bill Finance Bill Vote on Account

Vote on Account: It Is a grant made in advance before commencement of the coming financial year in the respect of the new year pending voting on demand for appropriation bill in the legislature. After the Budget is presented to the legislative Assembly towards the end of Feb., the general discussion thereon, voting of the Demands for Grants and the legislation of the Appropriation act are normally expected to be completed by the end of March, but in certain circumstances, a longer time may be allowed for general discussion, voting of demands and the passing of the appropriation Bill, with which the work specially the work may not be completed and it is necessary to continue the work into a part of the budget year also. On such occasions, demands for advance grants in respect of the estimated expr., for a part of the budget year may be presented to the LA. Thereafter the demands will be discussed and voted on and finally passed as an appropriation Act in the manner laid down in the constitution.

Appropriation bill :
After voting for all the demands for grants the bill is introduced and has to go before the both the houses in the legislature (demand for grants) for sanction Voted Expenditure: The expenditure which requires vote of the Legislative Assembly. Charged Expenditure:

The Expenditure which is not subject to vote of the Legislative Assembly.

Role of Legislative Council

No

power of amending and rejecting the budget It can make recommendations to the Assembly within 14 days Assembly may consider its recommendations or reject and include in the budget. After passing both the houses , Appropriation bill or Finance bill submitted to the Governor for his consent.

Governor may return it for reconsideration within a period of 10 days. After Governor assent the bill becomes an act.

Appropriation act :
The appropriation bill is passed by both the houses, it waits the Governors assent, then it will become an Act. The amount in the act became sanctioned grant for expenditure. The administrative Departments, HODs and SubOrdinate Offices can incur the expenditure.

Control of Expenditure CCO-Chief Controlling Officer SCO Subordinate Controlling Officer DDO Drawing and Disbursing Officer

LEGISLATIVE ASSEMBLY

FINANCE Secretary

Chief Controlling Officer Sub-Controlling Officer

DDOs

DTA DTO STO

Budget Control The CCO Should prepare and send the distribution statement of funds made to their Subordinate Officers quarterly wise, to the DTA. The DTA will scrutinize and authorize the distribution statements to DTOs to admit the bills on quarterly basis. The CCO may sent the distribution statement directly to the SCOs and DTOs for admitting the claims. The CCO/EO has to incur expenditure under plan and non plan on quarterly basis where specific order been given by the Finance Department.

In respect of items which are exempted from treasury control, the CCO may send the distribution statement directly to the SCOs and DTOs for admitting the bills. GO Ms No. 207/Fin Plan (FW BG) Dept Dt 7.12.1997 in relaxation of Treasury control orders. The following Departments are exempted from budget control

1.
2. 3.

4.
5. 6.

7.
8.

9.

Raj Bhavan High Court Legislative Assembly A.P. Administrative Tribunal All Secretariat Departments APPSC Electricity Department Forest Department & PWD LOC through cheques A.P. College Service Commission

Salaries Ex-gratia payments FTA Pensions, Gratuities and Commuted of pension Funeral Charges

Re-appropriation ( Para 20.4 of Budget Manual read with Govt Memo No. 6415-A/184/BG/A1/2002 Dt 11.03.2002)

Re-appropriation of funds from one unit of appropriation (Detailed head) to another. Re-appropriation funds between revenue to revenue, capital to capital loan to loan with in the same grant. Re-appropriation from Salaries to Salaries and Detailed/Sub detailed Heads to 130/131 Utility Payments from other Detailed Heads/Sub-Detailed Heads, but not vice versa

Re-appropriation are not permitted From one Grant to another Grant From Plan to Non-Plan and vice versa 510-Motor vehicles, 530-Major works, 270-minor works, 272-maintenance, 520-machinery equipment, 210 supplies and materials from other detailed heads vice versa.

Expenses All anticipated savings should be surrounded before 25th of February with full explanations

Supplementary Estimates (Para 20.11 of Budget Manual

The expenditure which is not covered by the budget provision due to unavoidable circumstances, such expenditure is to be provided in the supplementary Estimates to cover the expenditure by budget Unforeseen Expenditure A New Service. during the financial year.

Reconciliation of Departmental figures with those booked in the treasuries and the figures booked in the Accountant Generals Office (Para 19 of AP Budget Manual)

CCO SCOs/Unit Officers (All SCOs should furnish reconciled Expr., to CCO by the end of the month. CCO AGs Office Reconciliation Certificate to be issued on quarterly basis The CCO shall get the figures of receipts and expenditure of the entire State and a certificate shall be issued to the PAO The CAO (designated) has responsibility of reconciling the consolidated statewide figures of receipts and expenditure with AG Head wise.

Performance budget: A budget which exhibits not only the money but also the physical targets is a performance budget. (It should always indicates the physical targets)
Zero based budget: It is to start from zero base and view all activities and priorities afresh and create a better set up of allocations for the coming year.

Thank you
Mrs S. Rupa 9248005307