BUDGET

Public Fund
in
Government
Treasury

Taxes
Duties
etc.

Developmenta
l Welfare
activities

Legislative Control on Public Funds

Legislature has the Authority over Public Funds.
The Government is only the executive agency to give
effect to the decisions of the Legislature on all money
matters.
As it is not possible for the legislature to scrutinize and
approve the day-to-day monetary transactions of the
government, a system has been evolved by which the
government prepares a Financial Statement showing all
the anticipated Receipts and Expenditure classified under
certain broad Heads of Accounts for the ensuing year. It is
a mandate under Article 202 of the Constitution.

SOURCES OF INCOME TO THE STATE

GOVERNMENT
Revenue Receipts
Share of Central Taxes
Taxes on Commodities and Services
Taxes on Property and Capital Transaction
Non Tax Revenue
Interest Receipts
Receipts on departmental services
Grants in Aid from Government of India
Public Debt
Internal Debt State Development Loan
Loans and Advances from Government of India

EXPENDITURE OF THE STATE GOVT

Salary expenditure
Pay and allowances of the Govt. Employees
Non Salary expenditure
Office and other expenditure which includes Printing
charges, Stationery, Rents, rates and taxes, Water and
Electricity charges. Hire on vehicles.
Publicity
Interest Payments
Subsidies
Vehicle Maintenance including Oil and Petrol charges
Capital Expenditure
Expenditure on works
Debt Repayments
Repayment of Loans and Advances

Budget consists of

1. Consolidated Fund of the

State
2. Contingency Fund of the State
3. Public Account of the State

Consolidated Fund of the State

As per Article 266(1) of the Constitution of
India Consolidated Fund is formed of all
Revenues received by the State Government,
all Loans borrowed from Government of India,
from other Autonomous Institutions and the
Public and the Loans raised through the issue
of Treasury Bills, or Ways and Means
Advances and all money received by the
Government in recovery of
Loans and
Advances.

Contingency Fund
The Contingency Fund is intended to provide
advances for meeting unforeseen expenditure
arising in the course of a year, pending
authorization of such expenditure by Law to
be passed by the State Legislature under
Article 205 or 206 of the Constitution. The
present corpus is Rs. 50 crores.

Public Account
The Public Account of the State pertains to all
public moneys received by or on behalf of the State
Government which are not creditable to the
Consolidated Fund of the State.
All such money do not actually belong to the
Government but they have to be accounted for in
the same way as Government money and they have
to be repaid to parties concerned on the due dates.
The repayment of these amounts do not require the
vote of the Legislature, as they are in the nature of
ordinary banking transactions.

Voted and charged

Voted expenditure means expenditure
which is subject to the vote of the
Legislative Assembly.
Charged expenditure means as is not to
be submitted to the Vote of
the
Legislative
Assembly
under
the
provisions Article 202 of the Constitution.

Charged

Expenditure in respect of the Salaries

and allowances of judges of any High
Court, Governor of the State, Debt
repayment
including
Interest
Payments
and
other
Expenditure
relating to the raising of loans any
other expenditure declared by the
Legislature of the State by Law, to be
so charged

Plan
Any scheme to accomplish a purpose constitutes a
Plan. While firms and industries plan future
production, advertising, etc., Government plan, in
varying degrees, the future development or
performance of their economics. This is usually on
an Annual Plan basis and Five-Year Plan basis. Plan
schemes are mainly divided into two categories, viz.,
State Schemes (State Development Plan) and Central
Assistance to State Plan. There is yet another
category of schemes viz., Schemes assisted by
Autonomous Bodies, in respect of which the financial
assistance is rendered by the agencies like LIC, GIC,
National Co-operative Development Corporation,
NABARD, etc.

Budget and Accounting Classification

Classification is the structural key to planned and
rational Government Budgeting. With a view to bring
closer relation among Budget heads, account heads
and Plan Heads Sectorial classification was
introduced:
Sector
Major Heads
Minor Heads
Group Sub Head
Sub Heads
Detailed Heads

Head of Account
Sector indicate the grouping of the various
functions of the Government corresponding
to the sectors plan classification. They may
comprise sub sectors
where necessary.
A. General Services
B. Social Services
C. Economic Services
D. Grants in Aid and Contributions
Sub Sectors

Major head indicates the functions of the

Government such as agriculture, education,
health etc and to correspond to the heads of
development in plan classification. They may
comprise sub major heads where necessary.

Head of Account
Sub-Major head are opened where necessary
under a major head to record those
transactions which are of a distinct nature and
are of sufficient importance to be recorded
exclusively, but at the same time allied to the
function of the major head. The head of
account relating to each such sub division is
termed as sub major head and the budget
code is two digit code e.g. under the major
head 2202.Education the sub major head :01.
02.

Elementary Education
Secondary Education

Minor Head and Sub Head

Minor head means a head subordinate to a Major
head or Sub-Major head representing a specific
programme.
Group Sub head suggested in between the
Programme
Minor
head
and
Sub
head
representing a similar group of schemes which
are implemented under a separate funding
pattern. Eg. EAP,
Sub-head means a head subordinate to a minor
head. It indicates schemes for Plan Programmes
or administrative set-up in the case of non-plan
expenditure.

Detailed Head

Detailed head is the primary unit of

appropriation. It exhibits expenditure under
basic items like salaries, Travel Expenses,
Office Expenses etc.

Sub-detailed heads denote break-up of

detailed heads or object classification,
wherever necessary, and possible. e.g. 010
Salaries / 011 Pay / 012 Allowances / 013 DA
etc.

Demands for Grants

The estimates of Expenditure from the
Consolidated Fund, which are required to be
voted by the Legislature are presented to the
Legislative Assembly in the form of Demands
for Grants.
The demands for grants have been formulated
Secretariat Department wise and HOD wise.

At present there are 40 Demands

Grants in the State Budget.

Demands

For

No HOD will cross more than one demand for grant.

Grant No. XVI. Health, Medical and Family

Welfare Departments
Volume NO. III/8
HOD : Director of Medical Education
Sl.

Non-Plan

Plan

No.
1

Major Head

2210

Medical and
Public Health

2210

Medical and Public

Health

Sub-Major Head

01

Urban Health
Services Allopathy

01

Urban Health
Services Allopathy

Minor Head

001

Direction and
Administration

110

Hospitals and
Dispensaries

Group Sub Head

11

State Development
Plan

Sub Head

(01)

Headquarters
Office

(40)

RIMS General
Hospital

Detailed Head

010

Salaries

010

Salaries

Sub detailed
head

011

Pay

011

Pay

Budget Documents
1.

Budget Speech

2.

Volume I/1 Annual Financial Statement and

Explanatory Memorandum on Budget.

3.

Volume I/2- Statement of Demand for Grants.

4.

Volume II Detailed Estimates of Revenue and

Receipts.

5.

Volume III- Details of Demands for Grants for Non-Pan

and Plan. There are 17 parts in Volume III, each part
contains Demands for Grants or Departments coming
under each Department of Secretariat.

6.

Volume IV Public Account

7.

Volume V Annexure to the Budget.

Budget Documents

(contd..)

6.

Volume VI Budget in Brief

7.

Volume VII/1 Annual Plan

8.

Volume VII/2 Tribal Sub Plan

9.

Volume VII/3 - SC Sub Plan

10. Volume VIII Appendices to the Budget

Estimates.
11. Volume IX Analysis of the Demands for Grants
by Ministers.
12. Notice of Demands for Grants.
13. Volume X Government Commercial
Undertakings Supplement to the Detailed Budget
Estimates.

Approval of the Budget

After the demands are voted by the Assembly a
Bill called The Appropriation Bill shall be
introduced in the Legislative assembly for
authorization and then it has to be approved by
the Governor.
The Appropriation bill then becomes the
Appropriation Act which empowers the
Government to draw money and spend from the
Consolidated Fund of the State in accordance
with the vote of the Legislature.

Quarterly release of budget

Budget Release Order system was issued

from 1st April,

2001 vide G. O. Ms. No. 59 Finance & Planning (FW: BG)

Department dt.30-3-2001.

After passing of Appropriation Act in the State Legislature,

Budget used to be released funds quarterly through BROs
under Plan and Non-Plan and LOCs for works.

BROs used to be issued for Plan items of expenditure and

Non Plan items of Works , Grants in Aid and

Non BRO items are subject to quarterly regulations.

Budget Release Order

Based on the BROs issued by the Finance Department,

Administrative Department of Secretariat used to issue
Administrative Sanction Orders duly following the Business
Rules and Codal provisions.

.After passing of Appropriation Act in the State Legislature,

Budget used to be released funds quarterly through BROs
under Plan and Non-Plan and LOCs for works.

Based on the BROs issued by the Finance Department,

Administrative Department of Secretariat used to issue
Administrative Sanction Orders duly following the Business
Rules and Codal provisions.

Reforms subsequent to BRO

Government introduced Green Channel system releasing

entire Budget on items like Diet charges, Drugs and
Medicines,

subsidies,

Scholarships

Arogyasree etc.

Issue of LOC was removed for works

and

stipends,

Comprehensive Budget Release

Order

Comprehensive Budget Release Order (CBRO) system was

introduced to facilitate timely availability of funds to the
implementing agencies.

It enables the departments to distribute the budget

allotted to them in accordance with the annual work plan,
programme priorities, and specific monthly requirement of
the department rather than distribution in equal quarterly
instalments.

Secretariat Departments and Chief Controlling Officers

prepare the budget distribution statement online for
the entire approved 2016-17 Budget in accordance with
their annual work plan, programme priorities, monthly /
quarterly fund requirement, etc., and submit to the
Finance Department.

Comprehensive Budget Release

Order

Finance Department in
Budget Release Order.

turn

issues

Comprehensive

In respect of the Centrally Assisted State Development

Plan under Group Sub Head 12 and corresponding Matching
State Share provided under Group Head 11- State
Development Plan, the BROs will be issued after receipt of
the funds from Government of India and the concerned
funding agency.

Comprehensive Budget Distribution Order

Based on the CBRO, the Chief Controlling Officers prepare

Comprehensive

Budget

Distribution

Orders

(CBDO)

duly

distributing the approved budget amongst the Sub-ordinate

Controlling Officers (SCOs) as well as the Drawing and
Disbursing Officers (DDOs) for all four quarters of the 2016-17
financial year with immediate effect and release the same to
the SCOs and DDOs - duly making changes, if any.

Re-appropriations

As per para 17.4 of A.P. Budget Manual, the HODs are

authorized to re-appropriate funds from one unit of
appropriation to another unit of appropriation under
their control subject to following restrictions :

From one Grant to another Grant, between Revenue,

Capital and Loans Sections even in the same

Expenditure constituting New Service / Project / Scheme

for which there was no budget provision previously.
From Charged provision to Voted provision or vice-versa.
From Plan to Non-Plan.

Re-appropriations for accommodating recoveries.

Re-appropriations shall be with in the R.E fixed by the
Finance Department.

Re-appropriations

Conditions:-

The expenditure shall be under general control of HOD

or authority sanctioning Re-appropriation.
Re-appropriation should invariably be rounded to the
multiple of thousands only
Reappropriation should not involve the undertaking of
recurring liability i.e. liability which extends beyond
the financial year in question.
Reappropriations should not be rushed through at the
fag end of the financial year, to prevent the lapse of an
appropriation.

Accounts, RE and BE
1.

Accounts or actuals of a year are the amounts of

receipts and disbursements for the financial year
beginning on April 1st and ending on March 31st
following, as finally recorded in the AccountantGenerals books.

2.

Revised Estimates is an estimate of the probable

receipts or expenditure for a financial year, framed in
the course of that year with reference to the
transactions already recorded and anticipations for
the remainder of the year in the light of the orders
already issued or contemplated to be issued or any
other relevant facts. Revised Estimate is not an
Appropriation.

3.

Budget Estimates are the detailed estimates of

the receipts and disbursements of a financial
year.

Reconciliation
All the DDOs are requested to prepare an Expenditure
Statement and also the Statement of Receipts every
month and reconcile the figures with Treasury before
4th of the month succeeding month to which they
relate.
Chief Controlling Officer / Head of the Department
(HOD) is required to reconcile his departments
accounts with AGs figures and issue monthly
Reconciliation Certificates to AG every quarter.
An officer has to be nominated in the department and
make responsible for such a reconciliation process.

Thanks