The Union Budget or Annual Budget of India is the country’s comprehensive yearly financial statement consisting of a detailed report of the government’s finances, revenues from different sources and expenditures to be incurred on various activities. According to Article 112 of the Indian Constitution, the Central Government presents a statement of its estimated receipts and expenditure for the year, starting from April 1 and ending on March 31, before both houses of Parliament. The Budget is prepared by the Finance Ministry in consultation with Niti Aayog and other concerned ministries. The country’s Finance Minister presents the Budget in February and the presentation speech in the Lok Sabha comprises of Annual Financial Statement (AFS), Appropriation Bill, Expenditure Budget, Receipts Budget, Expenditure Profile, Medium Term Fiscal Policy cum Fiscal Policy Strategy Statement, Macro-economic framework for the relevant financial year, Demand for Grants (DG) and Finance Bill. The Union Budget includes Capital Budget, Revenue Budget, and Expenditure Budget. The primary objective of the Union Budget is to present the annual financial record and plans of the government and help in obtaining all-inclusive economic growth for the country. The budget aims at empowering the central government to carry out its constitutional duties such as delivering social justice and equality for all.
The Finance Ministry’s budget division of the department of economic affairs (DEA) prepares the Union Budget in consultation with various concerned ministries. The process starts six months prior to the date of presentation, in August-September and the budget needs to be passed by both Parliament houses before the beginning of the financial year (April 1). The Finance Ministry issues circulars to all ministries, Union territories, States and autonomous bodies requesting them to prepare estimates for the upcoming year. Then the requests are reviewed by the top government officials and upon approval, the report is then forwarded to the Finance Ministry. After that, revenues are allocated to various departments and the Finance Minister then holds pre-budget meetings with various stakeholders. Post consultation, the Finance Minister then takes the final call after discussion with the Prime Minister and then the budget is finalised.
The government presents an interim budget when it does not have the needed time for the preparation of the final budget. Most of the time, it is presented when general elections are near and the present government leaves the task of preparing a full budget for after the results of the elections. As the Union Budget is valid till the end of the financial year, i.e. March 31, the spending rights of the government are only up to that date. So when the central government could not present the final budget before the end of the fiscal year, it requires parliamentary approval to incur expenses from the day the new fiscal year starts and until a new budget is passed. Technically it is just like the full budget and as the name suggests only for a temporary period.
The Union Budget for the financial year 2023-2024 will be presented by Finance Minister Nirmala Sitharaman on February 1. Here are some interesting historical facts about the budget:
1. Independent India’s first budget was introduced on November 26, 1947, by then Finance Minister R K Shanmukham Chetty.
2. Nirmala Sitharaman delivered the longest speech, speaking for 2 hours and 42 minutes while presenting the budget on February 1, 2020.
3. Former Prime Minister Moraraji Desai presented the most number of budgets (10) during his tenure as Finance Minister between 1962-69, followed by P Chidambaram (9) and Pranab Mukherjee (8).
4. In 2019, Nirmala Sitharaman became the second woman after Indira Gandhi, to have presented the Union budget.
5. For the first time in Independent India, a paperless budget was presented due to the Covid-19 pandemic.
There are three types of budgets:
The various sources from which a government raises revenue are called government receipts. There are two types of receipts:
The expenditure of the government is categorised in two ways: