The Finance Minister Nirmala Sitharaman will present the Union Budget for the year 2022-23 on 1st February 2022. This post explains the union budget of India and how it is prepared.
What is Union Budget of India?
The Union Budget of India is referred to as the Annual financial statement in the constitution. According to Article 112 of the Indian Constitution, the Annual financial statement is a statement of the estimated receipts and expenditure of the government for that particular year.
In other words, it contains estimates of expected revenues and proposed expenditure of the Government for a year.
Apart from the above, the budget also outlines the economic policies of the Government and the tax proposals.
When is the Union Budget of India presented?
The budget is presented on 1st February every year by the Finance Minister in the parliament.
The Finance Ministry also presents the Economic Survey a day or two before the presentation of the Budget,
Till 2016, the budget was unveiled on the last working day of February. Last year, the cabinet decided to advance the date of presentation of the Union budget by a month.
[You may also read: The pros and cons of advancing budget date]
What is included in Union Budget of India?
Union Budget is divided into Revenue Budget and Capital Budget.
The revenue budget includes the government’s revenue receipts and revenue expenditure. Revenue receipts are taxes, interest, profits of public sector undertakings etc. Revenue expenditure is the expenditure incurred on day to day functioning of the government and on various services offered to citizens.
Capital Budget consists of capital receipts {like loans, disinvestment) and capital expenditure (like expenditure on infrastructure, payment of loans, health, education etc.).
How is the Union budget prepared?
The Budget is prepared through a consultative process between the Ministry of Finance and NITI Ayog.
It is a lengthy task that takes around 4 to 5 months.
The preparation of the budget starts in August/ September.
The Finance Ministry issues circulars in August/ September to all ministries, states, UTs, Autonomous bodies and departments asking for their revenue requirements for the next year.
The budget is presented in two parts. In the first part, the Minister discusses the general economic survey. In the second part, he outlines the tax proposals.
What happens after the preparation of budget?
It is detailed in this article by Firstpost
After the budget speech is presented, a general discussion on the broad budgetary measures takes place. Members participating in the debate outline principles and policies underlying the budget presented.
After this general discussion, the Parliament usually goes into recess for about three weeks. During this recess, Departmentally Related Standing Committees (DRSCs) examine the detailed estimates of ministries’ expenditure called demands for grants. The DRSCs then submit reports on each ministry’s demands for grants. Once the DRSCs have submitted their reports, discussion and voting take place in Lok Sabha on demands for grants of various ministries. The demands which have not been voted on by the last day fixed for passing the budget are “guillotined”, ie they are voted upon together.
The demands for grants are consolidated into the Appropriation Bill. This must be passed by the Parliament to allow withdrawal of funds from the Consolidated Fund of India for the sanctioned expenditure by the government.
Finally, the Finance Bill is put to vote. The budgetary process concludes with the passage of the Finance Bill.
To conclude, the budgetary exercise is completed after the passage of the Appropriation Bill and Finance Bill in the parliament.
[You may also read: What is Fiscal Responsibility and Budget Management (FRBM) Act?]
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