Page 251 - DECO201_MACRO_ECONOMICS_ENGLISH

Macro Economics

Notes payment, defense revenue expenditure, major subsidies (export, food and fertilizer), interest
and other subsidies, debt relief to farmers, postal deficit, police, pension and other general
services, social service, economic service (agriculture, industry, power, transport,
communications, science and technology, etc.) and grants to states and union territories,
and grants to foreign government. Capital non plan expenditure includes such items as:
Defense capital expenditure, loans to public enterprises, loans to states and union territories
and loans to foreign govt.
(b) Planned Expenditure: Planned expenditure is to finance central plans, such as agriculture,
rural development, irrigation and flood control energy industry and minerals transport,
communications, science and technology and environment, social services and others and
Central assistance for Plans of the state and Union Territories.

Task Go through the Union Budget presented by the Finance Minister for the financial
year 2011-2012. Highlight the main points of the budget pertaining to agricultural sector.

14.3.6 Budgets of State Government

In India each state govt. prepares its own budget of income and expenditure every year. State
govt. collects the revenue from different sources to meet their expenditure.

!
Caution The important source of revenue for states are VAT, (earlier sales tax), grant in aid
and other contributions from the Centre, states own non tax revenue , consisting of interest
receipts, dividends, and profits, general services (of which state lotteries are the most
important) social services and economic services. Besides this state also collect taxes on
income and commodities. State imposes income tax on agriculture and profession. State
govt. receives income from taxes on property and capital transactions. The main sources
are land revenue, stamps, and registration, and tax on urban and immovable property.
States also charges commodity taxes like motor vehicle tax, electricity duties, etc. State is
also empowered to impose tax alcoholic liquor, opium, Indian hemp, and other narcotics.

Case Study Budget: Fiscal Policy Overview

xternal Affairs and Finance Minister Pranab Mukherjee in February, 2009, said the
government cannot indulge in 'reckless borrowing' and did not have Parliamentary
Emandate to tweak taxes.
The following is the government's fiscal policy strategy statement that the finance minister
announced in Parliament.
A. Fiscal Policy Overview
1. The Union Budget 2008-09 was presented in the backdrop of impressive growth
in the Indian economy which clocked about 9 per cent of average growth in the
last four years.

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