Making sense of the Union Budget

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: The finance ministry is busy formulating the Union Budget which will be unveiled in the Lok Sabha on February 28. This will be the first proper Budget of the United Progressive Alliance (UPA) government. The earlier Budget, presented by finance minister P Chidambaram in July 2004, was in great measure a continuation of the Interim Budget prepared by his predecessor, Jaswant Singh. FE takes a closer look at the budgetary exercise and its significance:

How did the term budget originate and what does it mean?
The term ‘budget’ has been derived from the French word ‘bougette’, which means a leather bag or wallet. The term was used in its present sense for the first time in 1873, in a satire directed against Walpole’s financial plan for that year. Since then, the term has been used for an annual financial statement of income and expenditure of a government.

What are the Constitutional provisions?
The Union government, under Article 112, is required to lay an annual financial statement of estimated receipts and expenditure before both Houses of Parliament. Under Article 114, the government is required to get the Appropriation Bills approved by Parliament. This is necessary because the government cannot withdraw any money from the Consolidated Fund of India without the approval of Parliament.

Article 265 prohibits the government from collecting any taxes without the authority of law. Therefore, the government comes up with the Finance Bill. The Bill may levy new taxes, modify the existing tax structure or continue the existing tax structure beyond the period approved by Parliament earlier.

What are Budget documents?
The Union Budget comprises various documents. The first one is the speech of the finance ministry, which he reads in the Lok Sabha. Earlier, the speech used to be split into Part A and Part B. Part A used to contain the main features of the Budget, including policy initiatives, while Part B dealt with tax proposals. Former finance minister Jaswant Singh discontinued the practice of presenting the speech in two parts. Now there is one integrated Budget speech. The other important documents are: key to Budget documents; Budget at a glance; Annual financial statement; Demands for grants of central government; Expenditure Budget Volume I and II; Receipts Budget; Finance Bill; and Memorandum explaining the provisions in the Finance Bill. Later, ‘Implementation of Budget announcements’ and ‘Key features of the Budget’ was added to the set of Budget documents.