SOME IMPORTANT TERMS :WHAT IS BUDGET?

ANNUAL FINANCIAL STATEMENT (BUDGET)

The ordinary man confuses the finance minister's budget speech for the annual budget. But as laid down in the constitution, the budget actually refers to the annual financial statement tabled in Parliament along with the 13-15 other documents. Divided into three parts -- Consolidated Fund, Contingency Fundand Public Account -- it has a statement of receipts and expenditure of each. 

CONSOLIDATED FUND 

This is the core of the govt's finances. All revenues, money borrowed and receipts from loans it has given flow into this account. All government expenditure is made from this fund. Any expenditure from this fund requires the nod of Parliament. 
CONTINGENCY FUND 

All urgent or unforeseen expenditure is met from this ` 500-crore fund, which is at the disposal of the President. Any amount withdrawn from this fund is made good from the Consolidated Fund. 

PUBLIC ACCOUNT 

All money in this fund belongs to others, such as public provident fund. The government is merely working as a banker in respect of this fund. 

REVENUE RECEIPT/EXPENDITURE 

All receipts like taxes and expenditure like salaries, subsidies and interest payments that do not entail sale or creation of assets fall under the revenue account. 

CAPITAL RECEIPT/EXPENDITURE 

Capital account shows all receipts from liquidating (eg. selling shares in a public sector company) of assets and spending to create assets (lending to receive interest). 

REVENUE VS CAPITAL 

The budget has to distinguish all receipts/expenditure on revenue account from other expenditure. So all receipts in, say, the consolidated fund, are split into Revenue Budget (revenue account) and Capital Budget(capital account), which include non-revenue receipts and expenditure.