Budget and fiscal policy
- Budget = Annual Financial Statement (Art. 112); presented on 1 February (since 2017); Railway Budget merged in 2017. First budget of independent India: R. K. Shanmukham Chetty (26 Nov 1947).
- Receipts: revenue (tax, non-tax) and capital (borrowing, loan recovery, disinvestment). Expenditure: revenue (salaries, interest, subsidies) and capital (assets).
- FRBM Act 2003 — fiscal discipline; target fiscal deficit 3% of GDP. Largest item of expenditure: interest payments.
| Deficit | Formula |
|---|---|
| Revenue | Revenue expenditure − revenue receipts |
| Fiscal | Total expenditure − (revenue receipts + non-debt capital receipts) |
| Primary | Fiscal deficit − interest |
| Effective revenue | Revenue deficit − grants for capital assets |
Taxes
Direct: income tax, corporation tax (largest gross tax revenue now along with GST). Indirect: GST (1 July 2017; 101st Amendment; slabs; GST Council Art. 279A; IGST on inter-state), customs. Progressive tax: rate rises with income. Laffer curve: tax rate vs revenue.