TABLE OF CONTENTS Page No.

TABLE OF CONTENTS Page No. 1. Budget at a Glance 1-2 2. Rupee : As it come in and goes out 3. Budget: Basic Details 5 4. Economic Growth & Growth in Own Taxes 5. Revenue Receipts & Revenue Expenditure: Composition 9 6. Capital Receipts and Capital Expenditure : Composition 10 7. Capex as % of Total Expnd. & NPRE v/s Revenue Receipts. 8. Overall Fiscal Balancing 13 9. Overall Revenue Balance & Non-Plan Revenue Balance 10. Plan Allocation 2012-13 : Expenditure by Services/Sectors 17 11. PM s Reconstruction Plan 2012-13 17 12. Liability position of the State in the past 7 years 18 13. Budget 2012-13: Highlights 19-20 14. State Budget : Various Components 21-23

MAIN BUDGET : 2012-13 TABLE 1: BUDGET AT A GLANCE Items 2010-11 (Actuals) (RE) 2012-13 A. Revenue Receipts 22235 26701 25513 29948 B. Revenue Expenditure 18467 22752 22854 24990 Revenue Surplus (A-B) 3768 3949 2659 4958 C. Capital Receipts 3334 4511 5509 3905 D. Capital Expenditure 7102 8460 8168 8863 Capital A/C Deficit(C-D) 3768 3949 2659 4958 E. Total Expenditure 25569 31212 31022 33853 F. Total Receipts 25569 31212 31022 33853 Note: Budget Deficit (E-F) 0 0 0 0 All entries have been adjusted for transfers from and to Public Account. Explanatory Notes: 1. Revenue Receipts are all those receipts, which do not incur repayment liability. These include, in addition to the State s own revenues (Tax and Non- Tax), share in central taxes, grants from the Central Government for the financing of State Plans as well as non-plan grants. These also include interest and dividend on investments made by the Government. 2. Revenue Expenditure is that which covers the routine administrative expenditure of the State, such as wages and salaries, expenditure on maintenance and repairs and other overheads like payment of rent, taxes, user charges of services, insurance premia and interest. It also includes expenditure on goods for sale like in Stationery Depots, Govt. Presses, Agriculture Production Department, Health institutions and CA&PD. 3. Capital Receipts include loans raised by the State from the market, borrowings from RBI and other institutions, loans from the Centre, receipts from special securities issued to NSSF and the State s recovery of its own loans and proceeds from disinvestment of Government s stake in Public Sector Undertakings, all form part of Capital Receipts. 4. Capital Expenditure relate to the creation of assets. This corresponds to the State s own investment outlay on the acquisition of permanent assets like land, buildings, power projects, Irrigation and water supply schemes, establishment of Industrial Estates, all extensions and structural alteration of existing assets, construction of roads, railways, airports, plant / machinery, Inter-State Bus Terminals etc. etc. Disbursements, which are comprised of repayment of State public debt and the loans and advances made by the State to the various entities, are also taken as Capex. 1

5. Budget Deficit, the conventional deficit, is the difference between total expenditure and total receipts and has to be zero in the absence of monetization, State Governments have no access to the monetization route and as such Budget Deficit in their case ought to be zero. 6. Fiscal Deficit is the difference between aggregate disbursements net of debt repayments AND recovery of loans and revenue receipts and non-debt capital receipts. 7. Primary Deficit is Fiscal Deficit net of Interest Payments and Debt Servicing under Non-Plan. 8. Revenue Deficit is the difference between Revenue expenditure (Plan / Non- Plan) and Revenue Receipts (Tax / Non-Tax). 9. Budget Surplus / Fiscal Surplus / Revenue Surplus / Primary Surplus are the terms just opposite of such Deficit terms. 10. Balance from Current Revenues (BCR) is the difference between Revenue Receipts and the sum total of all Plan grants and Non-Plan Revenue Expenditure. 11. Aggregate Disbursements include (i) Revenue Expenditure (ii) Capital Disbursements and (iii) Disbursements under Public Account. 12. Aggregate Receipts include (i) Revenue Receipts (ii) Capital Receipts and (iii) Receipts under Public Account. 13. Miscellaneous Capital Receipts (MCR) are treated as Non Debt Capital Receipts. 14. Non-Plan Expenditure consists of salary, interest payments, subsidies and grants. It can be divided into revenue spending and capital spending. 15. Plan Expenditure consists of revenue spending and capital spending in the plan. Under the former is included salary and maintenance expenditure. Latter includes expenditure on creation of capital assets. 16. Central Plan refers to the Central Government s budgetary support to the Plan and, the internal and extra budgetary resources raised by the Public Sector Undertakings. 17. Subsidies are financial aid provided by the Government to individuals or a group of individuals to become competitive. The grant of subsidies is also aimed at improving skills of those who benefit from the subsidies. 18. Amortization refers to liquidating (a debt) by repayment in installments. 2

GRAPH-I RUPEE : AS IT COMES IN (2012-13) 12% 16% 13% 53% 6% Own Taxes Share of Central Taxes Own Non-Tax Central Grants Capital Receipts GRAPH - II RUPEE : AS IT GOES OUT (2012-13) 9% 37% 26% Salaries Pensions Interest Power 2% 9% 8% 9% Security Capital Exp Others

TABLE 2: BUDGET BASIC DETAILS Items 2010-11 (Actuals) (RE) 2012-13 Revenue Receipts 22235 26701 25513 29948 (i+ii+iii+iv+v) i. Own Tax Revenue 3483 4183 4791 5419 ii. Non-Tax Revenue 1093 1620 1851 2118 iii. Share of Central Taxes 3067 3328 3691 4245 iv. Resources from Centre 14592 17570 15180 18166 $ Revenue Expenditure 18467 22752 22854 24990 i. Plan 884 1178 1081 1412 ii. Non-Plan 17558 21547 21746 23548 of which: Interest payments 2283 2363 2538 2663 iii. CSS 25 27 27 30 Capital Receipts 3334 4511 5509 3905 i. Provident Fund (Net) 1203 550 878 880 ii. Borrowings and other 2587 * 3603 4275 2801 liabilities iii. Non-debt creating 5 358 356 224 iv. Others (Net) (-) 461 0 0 0 Capital Expenditure 7102 8460 8168 8863 i. Plan 5369 6622 6219 6588 ii. Non-Plan 1372 1440 1551 1835 of which : Repayments 967 1174 1174 1317 iii. CSS 361 398 398 440 Total Expenditure 25569 31212 31022 33853 i. Plan Expenditure 6253 7800 7300 8000 ii. Non-Plan expenditure 18930 22987 23297 25383 iii. CSS 386 425 425 470 Total Receipts 25569 31212 31022 33853 i. Plan Revenue Receipts 8625 12566 10322 13670 ii. Non-Plan Revenue Receipts 13610 14135 15191 16278 iii.capital Receipts 3334 4511 5509 3905 Non-Plan Revenue Gap - 3948-7412 - 6555-7270 Revenue Surplus 3768 3949 2659 4958 Budget Deficit 0 0 0 0 Fiscal Deficit 2367 2979 -- 2364 Primary Deficit (-) / Surplus (+) (-) 84 (-) 616 -- (+) 299 Memo Items: GSDP (at current prices) 54731.00 62365.00 62365.00 70160.00 (targeted) Own Revenues/GSDP ratio (%) 8.4 9.3 10.7 10.7 Total Tax + Non-Tax Revenues / 14.0 14.6 16.6 16.8 GSDP ratio (%) Fiscal Deficit / GSDP ratio (%) 4.3 4.8-3.4 $ This figure is tentative as the Scheme of Financing AP 2012-13 is yet to be approved by Planning Commission India. * Net of one-off market borrowing of ` 1300 crore to liquidate overdraft and also net of ` 500 crore worth market borrowing contracted in 2009-10 but actual flow whereof took place only in April, 2010. The figure will be worked out after final decision of MoF to the lifting of additional market borrowing of ` 1000 crore for funding current year s Plan. 5

GRAPH-III ECONOMIC GROWTH (GSDP at current prices) 15 14 14.1 13.9 13.6 14 13 12 11.6 11 10 9 8 07-08 08-09 09-10 10-11 11-12 GRAPH-IV GROWTH IN OWN TAXES (TAX + NON-TAX + SHARE OF CENTRAL TAXES) 14000 12000 10333 11782 10000 8000 6000 5138 5347 5897 7643 4000 2000 0 07-08 08-09 09-10 10-11 11-12 (RE) 12-13

TABLE 3: REVENUE RECEIPTS Items 2010-11 (Actuals) (RE) 2012-13 Revenue Receipts (I+II) 22235 26701 25513 29948 I. Resources from centre 17659 20898 18879 22471 i. Share of Central Taxes 3067 3328 3691 4245 ii.total Grants from Centre 14592 17570 15180 18166* (a+b) a. Non-Plan Grants, of which 5967 5004 4858 4496 i. Others 5162 4275 4071 3852 ii. SRE and Cost Sharing 805 729 787 644 b. Plan Grants including CSS 8625 12566 10322 13670 II. State s Own Revenues (1+2) 4576 5803 6642 7537 1. State s Own Tax Revenues 3483 4183 4791 5419 a. Sales Tax 2425 3025 3419 3940 b. Excise Duty 337 333 383 404 c. Others 721 825 989 1075 2. Non-Tax Revenues, of which Interest Receipts 1093 10 1620 20 1851 22 2118 20 * This figure is tentative as the Scheme of Financing AP 2012-13 is yet to be approved by Planning Commission India. TABLE 4: REVENUE RECEIPTS AND EXPENDITURE: COMPOSITION Items 2010-11 (Actuals) (RE) 2012-13 A. Revenue Expenditure 18467 22752 22854 24990 1. Plan Revenue Expenditure 909 1205 1108 1442 a. State Plan 884 1178 1081 1412 b. Centrally Sponsored 25 27 27 30 Schemes 2.Non-Plan Revenue Expenditure, of which : Interest payments 17558 2283 21547 2363 21746 2538 23548 2663 B. Primary Non-Plan Revenue Expenditure, of which: i. Salaries 15275 7297 19184 11220 19208 10381 20885 11788 ii. Migrant salaries 143 140 189 171 iii. Pensions 2242 2651 2780 3025 iv. Others 5593 5173 5858 5901 C. Plan Revenue Receipts 8625 12566 10322 13670 D. Non-Plan Revenue Receipts 13610 14135 15191 16278 9

TABLE 5: CAPITAL RECEIPTS Items 2010-11 (Actuals) (RE) 2012-13 Capital Receipts 3334 4511 5509 3905 1. Plan loans 17 0 0 0 2. Negotiated loans 704 700 700 700 3. NSSF Loan 358 453 125 125 4. Market Borrowings 1508* 2450 3450 1976 5. Non-debt creating 5 358 356 224 6. Provident Fund (Net) 1203 550 878 880 7. Others (Net) (-) 461 0 0 0 * Net of one-off market borrowing of ` 1300 crore to liquidate overdraft and also net of ` 500 crore worth market borrowing contracted in 2009-10 but actual flow whereof took place only in April, 2010. TABLE 6: CAPITAL EXPENDITURE Items 2010-11 (Actuals) (RE) 2012-13 Capital Expenditure 7102 8460 8168 8863 A. Plan Capital Expenditure 4774 6622 6219 6588 B. Non-Plan Capital 1372 1440 1551 1835 Expenditure i. Repayment of debt 967 1174 1174 1317 ii. Others 405 266 377 518 C. CSS 956 398 398 440 D. Surplus/Deficit on Capital Account -3768-3949 -2659-4958 10

GRAPH-V CAPITAL EXPENDITURE (CAPEX) AS % OF TOTAL EXPENDITURE (TE) (Reducing share of CAPEX in TE) 40 32.16 31.4 30 26.75 27.78 26.33 26.18 20 10 07-08 08-09 09-10 10-11 11-12(RE) 12-13 GRAPH-VI NPRE v/s Revenue Receipts (surging NPRE) NPRE Rev.Receipts 25000 20000 21746 23548 17558 15000 10000 5000 11666 7754 11735 7922 14771 8397 11583 13998 15137 0 07-08 08-09 09-10 10-11 11-12(RE) 12-13

TABLE 7: OVERALL FISCAL BALANCING S.No. Items 2010-11 (Actuals) (RE) 2012-13 1 Plan Revenue Receipts 8625 12566 10322 13670 2 Plan Revenue Expenditure 909 1205 1108 1442 including CSS 3 Surplus on Plan Account 7716 11361 9214 12228 4 Non-Plan Revenue Gap -3948-7412 -6555-7270 5 Revenue Surplus Available for 3768 3949 2659 4958 Capital Expenditure 6 Plan Capital Expenditure 5730 7020 6617 7028 including CSS 7 Non-Plan Capital Expenditure 1372 1440 1551 1835 8 Total Capital Expenditure 7102 8460 8168 8863 9 Borrowing Requirement (8-5) 3334 4511 5509 3905 10 Gross Capital Receipts 3334 4511 5509 3905 11 Non-Plan Revenue Gap 3948 7412 6555 7270 12 Total Plan Expenditure 6639 8225 7725 8470 including CSS 13 Total Non-Plan Capital Expnd. 1372 1440 1551 1835 14 Total Resource Requirement 11959 17077 15831 17575 (11+12+13) 15 Total Resource Availability (1+9) 11959 17077 15831 17575 13

GRAPH-VII OVERALL REVENUE BALANCE: (Revenue surplus available for Capex) 5000 4000 3768 4958 3000 2255 2264 2659 2000 1088 1000 0 07-08 08-09 09-10 10-11 11-12 (RE) 12-13 GRAPH-VIII NON PLAN REVENUE BALANCE 0 07-08 08-09 09-10 10-11 11-12 12-13 (RE) -1000-2000 -3000-4000 -5000-3486 -2927-3948 -6000-5470 -7000-8000 -6555-7270

TABLE 8: PLAN ALLOCATION 2012-13: EXPENDITURE BY SERVICES/SECTORS Revised Proposed Outlay 2012-13 Sector Outlay Revenue Capital Total AGRI & ALLIED ACTIVITIES 255.46 26.36 316.96 343.32 RURAL DEVELOPMENT 200.33 31.81 166.53 198.34 SPECIAL AREA PROGRAMMES 399.24 44.74 351.13 395.87 IRRIGATION & FLOOD CONTROL 483.56 0.68 446.05 446.73 ENERGY 496.27 10.13 445.00 455.13 INDUSTRY & MINERALS 152.29 19.12 134.24 153.35 TRANSPORT 876.25 5.28 817.80 823.08 COMMUNICATION 15.32 2.59 7.23 9.82 SCIENCE, TECHN. & ENVRMN 5.91 0.00 4.50 4.50 GENERAL ECONOMIC SERVICES 714.12 142.99 1088.41 1231.40 SOCIAL SERVICES 2328.61 1115.79 1416.30 2532.09 GENERAL SERVICES 672.64 12.86 693.51 706.37 Total 6600.00 1412.34 5887.66 7300.00 TABLE 9: PM s RECONSTRUCTION PLAN : 2012-13 Name of Project Outlay STRENGTHENING OF TRANSMISSION & 195.24 DISTRIBUTION NETWORK CONSTRUCTION OF MUGHAL ROAD 105.29 COUNTERPART FUND ADB : II 120.00 REHABILITATION OF DWELLERS WITHIN DAL & 233.82 NIGEEN LAKES TRT (5242) FOR KASHMIRI MIGRANTS 45.65 TOTAL 700.00 17

TABLE 10: LIABILITY POSITION OF THE STATE IN THE PAST 7 YEARS Year Internal Debt Loans & Advances from Central Total Public Debt Insurance and Pension Funds Provident Funds Other Obligations* Total Liabilities GSDP at current prices % of total liability to Govt. (base year 2004-05) GSDP 2004-05 6074 3626 9700 205 2910 1374 14189 27305 52 2005-06 7502 3508 11010 220 3307 2253 16790 29920 56 2006-07 8766 3384 12150 233 3720 2488 18591 33230 56 2007-08 10964 3262 14226 249 4046 2834 21355 37099 58 2008-09 13336 3135 16471 268 4485 3051 24275 42315 57 2009-10 15449 3144 18593 333 5113 4685 28724 48197 60 2010-11 16535 $ 2032 18567 358 6291 4756 29972 54731 54.8 (as against target of 56.1%) $ Excluding one-off debt of ` 1300 crore for reduction of overdraft. * Interest/Non-interest bearing obligations such as deposits of Local Funds, other earmarked funds, etc. 18

BUDGET 2012-13 (Highlights) WELFARE INITIATIVES: ` 130 crore for return and rehabilitation of Kashmiri migrants. Provision of ` 46 crore for completion of two room tenements for Kashmiri migrants under PMRP. ` 8 crore set apart for migrants group mediclaim insurance. Constituency Development Fund of Legislators enhanced to ` 1.50 crore. ` 90 crore for Sher-e-Kashmir Employment & Welfare Programme for the Youth. Provision of ` 26 crore to meet cost of VR/GHS in PSUs. ` 530 crore as State Share under Sarva Shiksha Abhiyan and Rashtriya Madhyamic Shiksha Abhiyan. ` 562 crore under National Rural Drinking Water Programme to cover 1414 habitations for safe drinking water. ` 21 crore for welfare of Scheduled Castes and OBCs. A provision of ` 366 crore for health of the people of the State. ` 150 crore under NRHM for Rural Health infrastructure. CHILD & WOMAN EMPOWERMENT: ` 139 crore for woman and child development related schemes. ` 110 crore for supplementary nutrition to girl students. ` 5 crore provision for Beti- Anmol scheme. ` 10 crore for empowering skilled young women. ` 16 crore for training of women in Handicrafts and Handlooms trade. Women specific provision of ` 165 crore in Health & Medical Education Sector. ` 524 crore specifically for women in Education Sector. INITIATIVES IN AGRICULTURE SECTOR: ` 721 crore for expanding irrigation network in the State. Investment of ` 343 crore in Agriculture Sector for improving seed replacement rate, farm mechanization, post harvest management and marketing facilitation of fruit, vegetable, commercial floriculture and sericulture produce. PRIs EMPOWERMENT: Devolution of ` 195 crore under 13 th Finance Commission, ` 53 crore under State Plan and ` 5 crore under Non-Plan to PRIs. Total availability of about ` 1531 crore for PRIs including funding under various Central Schemes. Earmarked provision under Thirteenth Finance Commission and MG-NREGA to address availability deficit of Panchayat Ghars. INFRASTRUCTURE DEVELOPMENT: ` 451 crore for Special Area Development Programme under Economic Services sector including ` 250 crore for special development needs of Jammu and Ladakh regions. Rural Development Sector gets ` 198 crore. Outlay for Social Services including Health, Education, Social Welfare, Water Supply ` 2532 crore. ` 124 crore for development of Tourism. Provision of ` 194 crore under Constituency Development Scheme. 19

Investment of ` 455 crore in Energy Sector. ` 682 crore for Roads infrastructure. ` 191 crore for construction of new/model degree colleges. A provision of ` 153 crore for Industry and Minerals. Availability of ` 534 crore worth upgradation grants under 13 th Finance Commission for various development activities. Housing & Urban Development Sector outlay ` 311 crore in addition to funds available under JNNURM. ` 369 crore for ERA projects. ` 105 crore under PMRP for completion of Mughal Road. ` 289 crore for maintenance and repairs of assets. Pilot projects in Tourism, Health & Urban Development Sectors under PPP initiative. SPECIAL AREA PROGRAMMES: ` 148 crore for development of Leh and Kargil Districts. A provision of ` 125 crore for Border Area Development. ` 40 crore under Tribal Sub-Plan. A provision of ` 18 crore for welfare of Gujjars & Bakerwals. ` 16 crore for welfare for Pahari Speaking people. ` 49 crore under Rashtriya Shram Vikas Yojana. OTHER SALIENT FEATURES: Estimates of Total Receipts (TR) ` 33853 crore. Estimates of Total Expenditure (TE) also at ` 33853 crore. Revenue Expenditure (RE) including Security Related Expenditure (SRE) ` 24990 crore, Capital Expenditure (CAPEX) ` 8863 crore. Non Plan Revenue Expenditure (NPRE) consumes ` 23548 crore of which ` 15113 crore on salaries and pension. A provision of ` 903 crore to disburse second installment of Pay/Pension revision arrears. Annual Plan 2012-13: ` 7300 crore. PMRP at ` 700 crore. Plan Revenue Expenditure (PRE) estimates at ` 1412 crore. Plan Capital Expenditure (PCE) ` 6588 crore. State share of ` 1000 crore in Plan to access over ` 2500 crore funding under CSS and various flagship programmes. ` 50 crore provision in 2012-13 for 10% Employer s share under New Pension Scheme introduced from January, 2010. ` 658 crore provision for Urban Local Bodies, Universities and other autonomous bodies / institutions for supplementing their revenue expenditure requirements. AUSTERITY MEASURES to be continued during 2012-13.. 20

STATE BUDGET: VARIOUS COMPONENTS The State Budget comprises of three parts: 1. Consolidated Fund 2. Public Account 3. Contingency Fund The Consolidated Fund is the source for all the usual budgetary transactions whether of capital, revenue or loan nature. State Tax and Non-Tax revenues are entered into the Consolidated Fund and any expenditure which are to be met from the Consolidated Fund must be voted by the State Legislature. Expenditures of Charged nature are also met out of the Consolidated Fund. The Consolidated Fund itself comprises of two parts: a) the revenue account ; and b) the capital account. The revenue account comprises expenditures covering the routine administration of the State, such as wages, salaries, maintenance and repairs, telephone expenses, day to day office running expenses and other overheads. Expenditures relating to the creation of assets - and this includes most (but not all) of Plan expenditure - are in the Capital account. Revenue receipts are all those incomes which do not incur repayment liability. These include, in addition to the State s own revenues, grants from the Central Government for the financing of State Plans, as well as non-plan grants. Capital receipts include internal debt, loans from the Center and the State s recovery of its own loans advanced to State Corporations, Co-operative Societies, etc., and are entered in the capital account. On the outlay side of the capital account, there are expenditures corresponding to the State s own investment outlay and disbursements, which are comprised of repayment of State public debt and the loans and advances made by the State to the various entities. Thus, both the capital and debt portions of the Consolidated Fund are under the Capital budget. The Public Account includes those funds which do not rightly belong to the State but which the State holds in trust for other entities. This would include such items as deposits from Municipal Corporations, pension fund accumulations of the emoployees provident fund, and reserve and depreciation funds. It could rightly be characterized as the fund for which the State acts as banker. 21

The Contingency Fund, as its name implies, is a fund for emergency use. It does not, in fact, contain any real money, but is an accounting figure that is included in the Budget to cover generally the decretal amounts and other unforeseen emergent expenditures. Expenditure from the Contingency Fund can be made with Cabinet consensus alone and hence have the advantage that the budgetary procedure - involving legislative approval - is circumvented; albeit the seal of Legislature subsequently to the expenditure thus incurred is a must. The monetary ceiling of Contingency Fund in most states is raised every few years through the budgetary process. STATE REVENUE RECEIPTS: State revenue receipts are, as stated earlier, those receipts for which the State has no re-payment liability and which are used to finance items of revenue expenditure. They consist of State tax revenues, non- tax revenues and grants from the Central Government. Revenue sharing is a built-in feature of the Indian fiscal scene. The Indian Constitution assigns to the State and Central Governments specific expenditure responsibilities - Irrigation, Power, and Agriculture, among others, are the sectors of State responsibility, while Defence, Posts and Telegraphs, Railways etc. fall in the Center s domain. Similarly, a breakdown has been made in the case of tax revenues, where many taxes, in the interests of efficiency and uniformity, are assigned to the Central Government and they are States enjoined from taping these sources. Share in Central Taxes represents the automatic revenue sharing, known as devolution, which all States receive. The States receive percent of the net tax revenues of the Centre. The proportion, in which these taxes are to be shared between the Centre and the States and amongst the States, is determined by the Finance Commission, a statutory body. State Expenditures: Expenditures are classified under two headings: a) revenue expenditures ; and b) capital expenditures. Broadly speaking, the terms revenue expenditures and current expenditures are used interchangeably just as the terms capital expenditures and investment. The correlation, however, is not exact. There is some investment expenditures on revenue account (basically capital expenditures), which are required for carrying out general administration of the State, such as housing for civil servants. Likewise, current expenditures shown up on the capital account. Formally, the difference between revenue and capital expenditure is determined on the basis of whether the expenditures are financed from revenue or capital receipts. 22

Plan expenditures may be either revenue or capital expenditures, since the expenditures of a non-capital nature are financed through Plan during the Plan period (they become Non-Plan committed expenditures at the termination of the Plan); but they are always developmental. Revenue Budget: Revenue spending (revenue expenditure) takes place from this budget. Salaries of government employees and military staff, perks for ministers, office furniture, grants to local bodies, subsidies, interest to be paid on loans taken, and pensions are all accounted for here and referred to as revenue spending. Any expenditure for the normal running of the Government, which does not lead to the creation of assets, is called revenue spending. This spending must be financed from revenue receipts, i.e. revenue that the Government earns. The Government earns revenue in the form of taxes 9 corporate, income), duties (excise, custom etc.), receipts, fee and interest and dividends (if the Government makes investments). Capital Budget: Capital spending (capital expenditure) refers to the money spent on creating assets (roads, highways, and dams), buying land or building, purchasing machinery and equipment. Loans from the Centre to various institutions or Government-run companies are clubbed here, too. Also included are any investments made by the Government in shares or other such instruments. This spending is financed from capital receipts, the money that the Government gets from loans. The loans can be from the public (market loans), from the Reserve Bank of India (the country s Central Bank) or from financial institutions. Finance Bill: Finance Bill consists the Government s proposals for the imposition of new taxes, modification of the existing tax structure or continuance of the existing tax structure beyond the period approved by the parliament.. 23