The budget plays a crucial role in shaping the economy, influencing various sectors, and determining policies that impact citizens, businesses, and industries.
Who Presents the Union Budget?
Sinc 2017, the Union Budget has been presented by the Finance Minister in Parliament on February 1. Previously, it was presented on the last working day of February, typically during the final week of the month — a practice followed since the Colonial Era.
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However, then-Finance Minister Arun Jaitley changed the date to February 1 to allow better planning and implementation of government policies. This shift enables early fund allocation, smoother execution of schemes, and alignment with the financial year, which begins on April 1.
The Union Budget, a statement of the estimated receipts and expenditure of the Government of India for a specific fiscal year — referred to as the ‘Annual Financial Statement’ under Article 112 of the Constitution — is introduced in the Lok Sabha (the lower house of Parliament). It is then discussed and approved by both houses of Parliament before being implemented on April 1.
Key Components of the Union Budget
The Budget consists of two major parts – the revenue budget and the capital budget, besides containing estimates for the next fiscal year.
Revenue Budget
- Revenue Receipts: Income generated by the government through taxes (like income tax, GST, excise duty) and non-tax sources (like dividends from public sector enterprises).
- Revenue Expenditure: Spending on the day-to-day operations of the government, such as salaries, subsidies, and interest payments.
Capital Budget
- Capital Receipts: Funds raised through borrowings, disinvestment, and asset sales.
- Capital Expenditure: Investments in infrastructure, defense, education, healthcare, and development projects.
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Why is the Union Budget Important?
The Union Budget is essential for several reasons:
- Economic Planning: It sets the direction for economic policies and reforms.
- Taxation and Relief Measures: It determines tax structures affecting individuals and businesses.
- Public Welfare: It allocates funds for healthcare, education, rural development, and employment programs.
- Inflation and Growth: Budgetary measures influence inflation control and economic growth.
The Budget-Making Process
The Budget is prepared through a structured process involving various ministries, Reserve Bank of India (RBI), NITI Aayog, and Finance Ministry. The key steps include:
- Planning and Consultation: Government departments submit financial proposals.
- Review and Approval: The Finance Ministry finalises estimates.
- Presentation and Debate: The budget is presented in Parliament and debated by lawmakers.
- Approval and Implementation: After approval, the policies and allocations take effect from April 1st.
Types of Budgets in India
- Annual Budget: The regular budget presented every year.
- Interim Budget: A temporary budget presented when elections are near.
- Vote on Account: A provision to manage government expenses until a full budget is passed.
