Railway Accounts Department Examinations

Showing posts with label General Budget. Show all posts
Showing posts with label General Budget. Show all posts

Wednesday, February 14, 2024

Budgetary Terms - Terminology


Budget - Terms 


  1. Budget Allotments:

Distribution of Funds by the Railway Board-The Grants as voted by the Parliament and the appropriation for the charged expenditure as sanctioned by the President are distributed by the Railway Board among the railway administrations and other authorities subordinate to them, as soon as possible, after the Budget is sanctioned.  The sums so distributed are called "Allotments". The allotments made out of funds voted by the Parliament are shown as "Voted" and those fixed by the President are shown as "Charged". 

  1. Budget Orders: 

The orders by means of which the allotments are made are called "Budget Orders".  

  1. Expenditure Order:

When orders are issued by the Railway Board authorising the Railway administrations to incur expenditure to a certain extent over and above the allotment sanctioned for them, they should be taken as Expenditure Order as distinct from “Budget Order”  

  1. Finance Bill:

When the Central Government proposes to introduce or amend taxes or the current tax structure (or continue with the same), the proposal is forwarded to the Parliament for approval in the form of Finance Bill. It can only be presented in Lok Sabha. 

  1. Excess Grants:

Actual expenditure incurred (out of the Consolidated Fund of India) in excess of a Grant voted by the Parliament will be regularized by the Parliament on the recommendation of PAC (Reasons to be fully explained by the spending authorities.) as a result of scrutiny of Appropriation Accounts of Railways and Audit Report of C&AG.  Presented after obtaining the recommendation of the President of India.Authority: Article 115 of the Constitution of India.  

  1. Residual Modifications: 

Residual Modification sanctioned by Competent authority (i.e., Railway Board, GM etc other than Parliament) i.e., Reappropriations, withdrawals, surrenders etc, It may be a plus or minus amount.  

  1. Annual Financial Statement:

As per Article 112(1) of the Constitution of India prescribes that 'the President shall in respect of every financial year cause to be laid before both the Houses of Parliament a statement of the estimated receipts and expenditure of the Government of India for that year’ referred to as the "annual financial statement" and popularly called the "Annual Budget". 



  1. Appropriation Bill:

Pursuant to Article 114 (1) of the Constitution, after the Demands for Grants have  been voted by the Lok Sabha, there shall be introduced a Bill to provide for the Appropriation out of the Consolidated Fund of India of all moneys required to meet the grants so made by the Lok Sabha and the expenditure, If any, charged on the Consolidated Fund of India. 

The Appropriation Bill as passed by the Parliament and assented to by the President forms the basis for budgetary allocation to the Railways. 

This Bill gives power to the Railways (as part of the Government) to withdraw funds to meet the expenditure during the financial year. The funds are withdrawn from the Consolidated Fund of India. 


  1. Charged Expenditure:  

Article 113(1) of the Constitution provides that 'the estimates of expenditure charged upon the Consolidated Fund of India shall not be submitted to the vote of Parliament'.  There is, however, no restriction on either House of Parliament discussing any of these estimates, where after funds are sanctioned by the President.  

In respect of Railways, the following expenditure is "charged" on the Consolidated Fund of  India-  

  1. The salary, allowances and pension payable to or in respect of the Comptroller and Auditor General of India;

  2. Any sums required to satisfy any judgement, decree or award of any Court or awards by     Arbitrators were made into rule of court ;

  3. Any other expenditure declared by the Constitution or by Parliament by law to be so charged.  


  1. Voted Expenditure: 

Article 113(2)  requires that estimates of voted expenditure "shall be submitted in the form of demands for grants to the House of the People (Lok Sabha) and the House of the People shall have power to assent, or to refuse to assent, to any demand, or to assent to any demand subject to a reduction of the amount specified therein".  


  1. Gross Working Expenses: 

Consists of Ordinary Working Expenses plus Appropriation to DRF plus Appropriation to Pension Fund. True expenses in an accounting period whether or not actually disbursed. 


  1. Gross Expenditure: 

Consists of Gross Working Expenses plus Suspense (DP - Demands Payable & MAR - Miscellaneous Advance Revenue).  Working Expenses actually disbursed during an accounting period. 

  1. Ordinary Working Expenses: 

Expenses booked under final heads (erstwhile Demands 03 to 12)


  1. Gross Earnings/Revenue: 

Consists of Coaching Revenue (less Refunds) plus Goods Revenue (less Refunds) plus Sundry Other Revenue. True or accrued earnings in an accounting period  whether or not actually realized.  

Complies Commercial Accounting.  


  1. Gross Receipts: 

Gross Revenue plus Suspense (Traffic & DR-Demands Recoverable).  Revenue/Earnings actually realised during an accounting  period.  

Complies Government Accounting. 

  1. Net Receipts/Surplus/Shortfall: 

Difference between Total Revenue Receipts minus Total Revenue Expenditure

  1. Demands for Grants: 

The proposals of the Government in respect of sums required to meet expenditure from the Consolidated Fund of India are to be submitted in the form of "Demands for Grants" to the Lok Sabha.

The Demands shall be for gross expenditure ; the credits or recoveries being shown in the form of footnotes to Demands.  

  1.  Budget Cycle: 

The cycle is the life of a budget right from its preparation to its reviews. Broadly A. Preparation of Budget B. Execution of Budget C. Budgetary Reviews (1.RE/BE 2.FME). D. Appropriation Accounts.  However the detailed cycle is as follows: 

  1. Budget Estimates Preparation (by the Executives at the Grassroot level).

  2. Presentation to the Parliament (by the Finance Ministry)

  3. Passing of the Appropriation Bill by the Parliament.

  4. 1st Review: Revised Estimates stage - September (by taking first five months actuals)

  5. Presentation of Supplementary Demands for Grants to the Parliament.

  6. Passing of Supplementary Demands by the Parliament.

  7. Supplementary Grants / Revised Grants 

  8. 2nd & the Last Review: FME - Final Modification Estimates - January

  9. Final Grant by the Railway Administration 

  10. Appropriation Accounts at the end of the Financial Year (31st March)  & its scrutinisation by the PAC - Public Accounts Committee.

  11. Excess Grants (if any) after the expiry of Financial Year to regularize the excess expenditure. 

  1.  Civil Demands/Civil Grants: 

To enable the Ministry of Finance to incorporate the requirement of and /or information relating to the Ministry of Railways regarding staff advances(HBA, PC Advance etc) and other transactions such as Income Tax, Interest on Advances, Deposits etc  which form part of the General Budget.


  1.  New Service:   

Article 115 of Constitution of India and Para 370 of Indian Railways Finance Code   -  "The expenditure arising out of a new policy decision, not brought to the notice of Parliament earlier (i.e., through Railway Budget), including a new activity or a new form of investment."

  1. New Instrument of Service:  

It is a slight variation of New Service.  It refers to relatively large expenditure arising out of important expansion of an existing activity.

To be continued…………

Monday, March 13, 2023

Excess Grants


Excess Grant - Regularisation of Excess Expenditure

  • Authority: Article 115 of the Constitution of India

  • Excess grants are made when the expenditure has been incurred after a Financial Year has expired. 

  • Actual expenditure incurred (out of Consolidated Fund) in excess of Grant voted by the Parliament will be regularised by: 

  • Reasons to be fully explained by the spending authorities. 

  • On the recommendation of PAC as a result of scrutiny of Appropriation Accounts of Railways and Audit Report of CA&G.  

  • Presented after obtaining the recommendation of the President of India. 


Monday, December 7, 2020

Merger of Railway Budget with General Budget

 Merger of Railway Budget with General Budget 

Salient Points

  • With effect from 2017-18 year


  • Single Demand for Indian Railways  -  83- Ministry of Indian Railways  (Subsumed all existing 16 Demands Numbering 01 to 16)


  • Initially Demand No 80 is allotted to Indian Railways. Subsequently it is changed to 81 and again to 82.  Finally for 2020-21 year, the Demand No is 83 (Due to additions and deletions of Ministries/Dept in Union Government)


  • Erstwhile Demands 03 to 14 (Total 12) are renamed as SMH - Sub Major Head 01 to 12 respectively under Major Head 3002 - Indian Railways Working Expenses - Commercial Lines. 


  • But Classification /Allocation of Expenditure still align with the erstwhile Demands Nos 01 to 06 as per Indian Railways Finance Code Volume II


  • Demand No. 83 is subdivided into Revenue Section and Capital section.


  • Revenue Section  - Major Heads 3001, 3002


  • Capital Section - Major Head 5002


  • Capital At Charge since inception stands extinguished.  Hence No Dividend needs be paid on Capital at Charge.


  • At the same time, no subsidies are available to Indian Railways from Union Government


  • Interest on Capital is however worked out just like Dividends, but no amount need be paid.


  • August Review Estimates Budget Review is dispensed.  Two Budget Reviews only existed as of now. 1.  RE/BE - Revised Estimates of Current Year/Budget Estimates of Next Year and 2. FME - Final Modification Estimates 


  • RE/BE is now due in September in lieu of November.


  • Works Budget  - Proposals to be sent for Works in Progress only


  • Benefits and Pitfalls of Joint Family over Nuclear Family will apply. 


  1. Only One Appropriation Bill (instead of Two Appropriation Bills) 

  2. Both Time and Money for preparation of Railway Budget is saved

  3. Less Political Pressure on Ministry of Railways

  4. No Populism Budget

  5. Revenue deficit (of Indian Railways) will be passed on to Finance Ministry

  6. More flexible for Railway Board to re appropriate between Sub Major Heads (erstwhile Demands)

  7. Annexure J  - Big Relief to Indian Railways - Statement of Misclassification is now limited to Misclassification from Revenue to Capital or vice versa and Voted to charged or vice versa)  - Included in Appropriation Accounts and goes to Parliament through PAC

  8. Misclassification from One SMH to another SMH on Revenue segment only figured under Statement of Other Mistakes (Not Statement of Misclassification)  - Not appeared in Appropriation Accounts.  To be settled at Zonal Railway level only.