Budget Terms Explained

A government's spending plan for the year. Shows how much money it expects to earn (revenue), how much it plans to spend (expenditure), and what to spend on (departments, schemes, projects). Example: Like your household budget—income vs expenses, but with much bigger numbers.

India's budget year runs April 1 to March 31 (not calendar year). "2020-21" means: • Starts: 1 April 2020 • Ends: 31 March 2021 Why April? Historical reasons from British colonial administration.

India uses lakhs and crores instead of millions/billions. Quick Conversion: • 1 lakh = 100,000 (one hundred thousand) • 1 crore = 100 lakhs = 10,000,000 (ten million) Examples: • 5 lakhs = 500,000 • 10 crores = 100,000,000 • 1,000 crores = 1 billion In our data: Amounts are in LAKHS unless otherwise stated.

What government PLANS to spend at start of year. Announced in February/March for the coming financial year. Example: In March 2023, government announces 2023-24 BE.

Mid-year update based on reality. Announced in February/March of the same year. Why revised? Revenue may be lower than expected, priorities change, projects get delayed. Example: In Feb 2024, government revises 2023-24 estimates.

What was ACTUALLY spent after the year ends. Published ~2 years later due to the audit process. Why the lag? CAG (Comptroller and Auditor General) needs time to verify spending before Accounts are finalized. Example: 2021-22 Accounts appear in 2023-24 budget documents.

Timeline for 2021-22: • April 2021: Financial year starts • March 2022: Financial year ends • April 2022 – March 2023: Departments compile spending data • April 2023 – March 2024: CAG audits the accounts • Late 2023/Early 2024: 2021-22 Accounts published This is why you see "2021-22 Accounts" in the 2023-24 budget document.

Day-to-day running costs: • Salaries of government employees • Office supplies and electricity • Maintenance and repairs • Subsidies and grants • Interest payments on loans Think: Money that's spent and gone. No asset created. Also called recurrent expenditure. Example: Paying a teacher's salary (₹50,000/month) is revenue expenditure.

Creating assets that last: • Building new schools, hospitals, roads • Buying equipment, machinery, vehicles • Investing in infrastructure Think: Money that creates something lasting. Example: Building a new school building (₹2 crores) is capital expenditure.

• Revenue = necessary but doesn't build anything • Capital = builds infrastructure, creates future value A government spending 95% on revenue (salaries, maintenance) and only 5% on capital (new projects) isn't investing in the future.

Old classification system used until 2017: Plan Expenditure = Development spending (new schemes, projects) Non-Plan Expenditure = Routine spending (salaries, interest, maintenance) Why in our data? Budget documents from 2013-17 use this system. Discontinued: In 2017, India scrapped this classification as outdated.

Every rupee spent is classified using a 6-level code system. Like an address: Country > State > City > Street > House Number

Examples: • 2055 = Police • 2210 = Medical & Public Health • 3452 = Tourism • 4059 = Capital Outlay on Public Works Structure: • 2xxx = Revenue expenditure on services • 3xxx = Revenue expenditure on economic services • 4xxx = Capital expenditure (building assets) • 5xxx = Loans and advances

Example under Tourism (3452): • 01 = Tourist Infrastructure • 80 = General administration

Example under Tourist Infrastructure (3452-01): • 101 = Tourist Centres • 102 = Tourist Rest Houses

Common codes: • 0011 = General (state's own funds) • 0031 = Centrally Sponsored Schemes • 0099 = General programme

Example: 1121 = Director Tourism Kashmir

Examples: • 001 = Salaries • 006 = Medical reimbursement • 115 = Works (construction) • 028 = Grants-in-Aid

Breaking it down: • 3452 = Tourism (Major Head) • 01 = Tourist Infrastructure (Sub-Major Head) • 101 = Tourist Centres (Minor Head) • 0099 = General programme (Group Head) • 1121 = Director Tourism Kashmir (Sub-Head) • 001 = Salaries (Detailed Head) This means: Salary budget for Director of Tourism Kashmir office, under tourist infrastructure development.

Funded entirely by state/UT government. State decides priorities and implementation. Examples: State police, state roads, local development programmes

Funded entirely by central (national) government. Implemented by central agencies. Examples: National highways, defence, railways

Funded by BOTH central and state. Usually 60:40 or 90:10 split (varies by scheme). How it works: Centre says "We'll run a rural roads scheme. We pay 60%, you pay 40%." State must budget its 40% share to access central funding. Examples: PM Awas Yojana (housing), National Health Mission

How budget is organised for legislative approval. Budget is divided into "Demands"—one per major department. Example: • Demand No. 11 = Industry & Commerce Dept • Demand No. 20 = Tourism Dept Each Demand is presented separately for approval.

Voted: Requires legislature approval (95% of budget). Legislature debates and votes. Can be reduced but not increased. Charged: Automatically approved (5% of budget). Constitutionally mandated, cannot be voted on. What's Charged: • President/Governor's salary • Supreme Court/High Court judges' salaries • Debt interest payments • CAG's salary Why? Some spending is so fundamental to democracy it shouldn't depend on political voting.

On 5 August 2019, Jammu & Kashmir was reorganised. Before: • J&K was a state • Included Jammu, Kashmir, and Ladakh • Had full state powers After: • J&K became ONE Union Territory (Jammu AND Kashmir together) • Ladakh became separate Union Territory • More direct central government control Impact on Budget Data: • Pre-2019: J&K state budget (included Ladakh) • Post-2019: J&K UT budget only (Ladakh separate) • Budget structures changed • Some departments split/merged • Direct comparison across 2019 is complex IMPORTANT: We CANNOT disaggregate Jammu from Kashmir in our data.

Budget = The plan (what they want to spend) Expenditure = Reality (what they actually spent) Example: Budget: "We'll spend ₹100 crores on roads" Expenditure: "We spent ₹87 crores" (projects delayed)

Revenue Deficit: Revenue receipts < Revenue expenditure. Can't cover even day-to-day costs from own income — BAD. Fiscal Deficit: Total receipts < Total expenditure. Borrowing to invest in infrastructure — NORMAL in moderation. Debt: Accumulated borrowing over many years (plus interest).

What matters: • How much on capital (infrastructure) vs revenue (salaries)? • How much on development vs maintenance? • How efficiently is it spent? • Does actual spending match budget? (Or do projects remain unfinished?) Example of Bad: Budget increases ₹1,000 crores → ₹1,200 crores. But ₹150 crores is just salary increases (inflation) and ₹50 crores is increased debt interest. Real new development: Zero. Example of Good: Budget increases ₹1,000 crores → ₹1,100 crores. But ₹80 crores is new capital expenditure on schools. Real new development: Significant.

BE = Budget Estimates RE = Revised Estimates AC or Accounts = Actual Expenditure FY = Financial Year PWD = Public Works Department PDD = Power Development Department PHE = Public Health Engineering CSS = Centrally Sponsored Scheme CAG = Comptroller and Auditor General UT = Union Territory GoI = Government of India GoJK = Government of Jammu & Kashmir