The Union Budget of India, also referred to as the Annual financial statement in the Article 112 of the Constitution

of India,[1] is
the annual budget of the Republic of India. It is presented each year on the last working day of February by the Finance Minister
of India in Parliament.

Annual Financial Statement is a document presented to the Parliament every year under Article 112 of the Constitution of
India, showing estimated receipts and expenditures of the Government of India for the coming year in relation to revised
estimates for the previous year as also the actual amounts for the year prior to it.

The receipts and disbursements are shown under three parts in which Government Accounts are to be kept viz.,(i) Consolidated
Fund, (ii) Contingency Fund and (iii) Public Account.

Under the Constitution, Annual Financial Statement has to distinguish expenditure on revenue account from other expenditure.
Government Budget, therefore, comprises of Revenue Budget and Capital Budget.

The estimates of receipts and expenditure included in the Annual Financial Statement are for the expenditure net of refunds and
recoveries, as will be reflected in the accounts.

The estimates of receipts and disbursements in the Annual Financial Statement are shown according to the accounting
classification prescribed by Comptroller and Auditor General of India under Article 150 of the Constitution, which enables
Parliament and the public to make a meaningful analysis of allocation of resources and purposes of Government expenditure.

Revenue Budget

Revenue Budget consists of the revenue receipts of Government (tax revenues and other revenues like interest and dividend on
investments made by Government, fees, and other receipts for services rendered by Government) and the expenditure met from
these revenues.

Revenue expenditure is for the normal running of Government departments and various services, interest payments on debt,
subsidies, etc. Broadly, the expenditure which does not result in creation of assets for Government of India is treated as revenue
expenditure. All grants given to State Governments/Union Territories and other parties are also treated as revenue expenditure
even though some of the grants may be used for creation of assets.
Capital Budget consists of capital receipts and capital payments.

The capital receipts are loans raised by Government from public, called market loans, borrowings by Government from Reserve
Bank and other parties through sale of Treasury Bills, loans received from foreign Governments and bodies, disinvestment
receipts and recoveries of loans from State and Union Territory Governments and other parties.

Capital payments consist of capital expenditure on acquisition of assets like land, buildings, machinery, equipment, as also
investments in shares, etc., and loans and advances granted by Central Government to State and Union Territory Governments,
Government companies, Corporations and other parties.

External Commercial Borrowings

Any money that has been borrowed from foreign sources for financing the commercial activities in India are called External
Commercial Borrowings. The Government of India permits ECBs as a source of finance for Indian Corporates for expansion of
existing capacity as well as for fresh investment. The ECBs are defined as money borrowed from foreign resources including the
following: Commercial bank loans Buyers credit and suppliers credit Securitised instruments such as Floating Rate Notes and
Fixed Rate Bonds etc. Credit from official export credit agencies and commercial borrowings from the private sector window of
Multilateral Financial Institutions such as International Finance Corporation (Washington), ADB, AFIC, CDC, etc.