ARTICLE:

SOURCE: Times of India, 23rd February 2014

INTRODUCTION:
Public finance is the study of the role of the government in the economy. It is
the branch of economics which assesses the government revenue and
government expenditure of the public authorities and the adjustment of one or
the other to achieve desirable effects and avoid undesirable ones.

FACTS OF THE CASE:

According to the analysis of interim budget presented in Lok Sabha, during
financial year 2013-14, the estimated total expenditure for several development
schemes was Rs. 1,35,891/- crore and the revised estimated expenditure turned
up to Rs. 1,04,080/- crore .The reason for the reduction in the expense was that
to cut down the fiscal deficit from 4.8% to 4.6% and to keep the rating agencies
happy.
Further the total estimated expenditure for financial year 2013-14 was Rs. 5.55
lakh crore. However the actual amount of expenditure reduced Rs. 4.75 lakh
crore.

ANALYSIS:
The revised budget shows the final pictures of government expenditure in last
financial year. The slash down of funds on the social sector schemes is
completely unreasonable and savage Moreover during the year 2013-2014 has
not seen major natural calamities or national elections which divert personnel
and typically leads to less expenditure

Moreover the inflation rate in the last year was an average of 8.79 which was
termed to be as moderate and the country has also experienced a good rainfall
throughout the season which avoids to widespread of drought for fourth straight
years
It has been argued that states are unable to spend and so funds cannot be
released from centre but spending fund is not a big issue the main problem is
right funds for right development.

SHARE OF TAXES IN REVENUE OF CENTRAL GOVERNMENT:

GRAPH ANALYSIS:
There has been a compositional change in gross tax revenues of the Central
Government since 2007-08. As a proportion of total tax revenue the share of
direct taxes has overtaken the share of indirect taxes. Although there is a decline
in share of direct taxes in recent years, its share is slightly higher than share of
indirect taxes.

FUNDS RECEIVED AND EXPENDITURE ON FLAGSHIP

SCHEMES:

SALIENT FEATURES OF PUBLIC FINANCE IN BUDGET 2013-14:

1. FISCAL DEFICIT, CURRENT ACCOUNT DEFICIT, INFLATION:

Foreign investment in an imperative in view of the high current account
deficit (CAD). FII, FDI and ECB three main source of CAD Financing.
Foreign investment that is consistant with our economic objectives to be
encouraged.
Faced with huge fiscal deficit, Government expenditure rationalised in
2012-13.. Space to be used to further Governments socio-economic
objectives.
2. HEALTH AND EDUCATION:
Health for all and education to all remains priority. Rs.37, 330 crore
allocated to the Ministry of Health & Family Welfare and Rs.65,867
crore to the Ministry of Human Resource Development
3. DIRECT TAXES:
Relief for Tax Payers in the first bracket of RS.2 lakhs to Rs.5 lakhs.A tax
credit of Rs.2000 to every person with total income upto Rs.5 lakhs.
Surcharge of 10 percent on persons (other than companies) whose
taxable income exceed Rs.1 crore to augment revenues.
4. INDIRECT TAXES:
No change in the normal rates of 12 percent for excise duty and service
tax.
No change in the peak rate of basic customs duty of 10 perent for nonagricultural products.
5. DRINKING WATER:
Rs. 15,260 crore allocated to Ministry of Drinking Water and Sanitation.
Rs .1,400 crore provided for setting-up of water purification plants in
2000 arsenic and 12000 fluoride-affected rural habitations.

6. RURAL DEVELOPMENT:
Allocation of Rs.80,194 crore in 2013-14 for Ministry of Rural
Development marking an increase of 46% over RE 2012-13.

DECOMPOSITION OF (GENERAL) GOVERNMENTS

EXPENDITURE YEARWISE:

GRAPH ANALYSIS:
As far as broad composition of the total expenditure of General Government is
concerned, non-developmental expenditures remained dominant over
developmental expenditure in total expenditure till the financial year 2004-05.
Since 2004-05, there has been an increase in the share of developmental
expenditure to total expenditure

GRAPH ANALYSIS:
Internal debt of the central government was 37.3 percent of gdp which largely
consists of fixed tenor and fixed rate market borrowings viz dated securities and
treasury bills.Most of the external debt is from multilateral agencies such as
IDA,IBRD,ADB etc.a small proportion of external debt originates from official
bilateral agencies.The entire external debt is originally long term and a major
part is at fixed interest rates.

RELEVANCE OF FINANCE COMMISSION:

Apart from its recommendations on the sharing of tax proceeds between the
Centre and the States which will apply for a five-year period beginning April 1,
2015, the Commission has been asked to suggest on:
Pricing of public utilities such as electricity and water in an independent
manner and also look into issues like disinvestment, GST compensation,
sale of non-priority PSUs and subsidies.
Measures for maintaining a stable and sustainable fiscal environment
consistent with equitable growth including suggestions to amend the Fiscal
Responsibility Budget Management Acts.
With regard to debt-stressed states, the Commission has been asked to
suggest steps for augmenting revenues of states which are lagging.

CONCLUSION:
The decisions taken by the government is not wrong. Its true from their point of
view that reduction in public finance will help them to increase the growth rate
and help them to decrease the deficit also. The base development should be of
rural people. The expenditure done now on these people will develop country in
future and its a long term investment. So, the basic development starts from
primary education , sanitation , health , child development , water supply etc.
and that is needed in rural area more, so cut down in welfare of these areas is
not appropriate.

BIBLIOGRAPHY:
WEBSITES:
-www.saiindia.gov.in
-www.finmin.inc.in
-www.indiabudget.nic.in
BOOKS:
-Dutt and Sundaram-Indian economy
-Uma Kapadia-Indian economy