All About The Preparation Of Union Budget

Finance Minister Nirmala Sitaraman is set to table the government’s Union Budget 2024 on Tuesday, July 23. This will be the sixth full budget presented by her after the NDA coalition won the majority in the 2024 Lok Sabha election which was concluded in June.

The Budget presented will be for the fiscal year 2024-2025.

Read also: “Very Serious Problem”: Rahul Gandhi In Lok Sabha On NEET Paper Leak

What is the Union Budget?

According to Article 112 of the Indian Constitution, the Union Budget of a year, also referred to as the annual financial statement, is a statement of the estimated receipts and expenditures of the government for that particular year.

The Union Budget keeps the account of the government’s finances for the fiscal year that runs from 1st April to 31st March. It can be classified into Revenue Budget and Capital Budget.

The revenue budget includes the government’s revenue receipts and expenditures. The revenue expenditure is the expenditure incurred on day to day functioning of the government and on various services offered to citizens. If the expenditure exceeds revenue receipts, the government incurs a revenue deficit.

The Capital Budget includes capital receipts and payments of the government. The capital receipt mainly consists of loans from the public, foreign governments, and RBI. While Capital expenditure is the expenditure on the development of machinery, equipment, buildings, health facilities, education etc. A fiscal deficit is uncured when the government’s total expenditure exceeds its total revenue.

The union budget is prepared by the Department of Economic Affairs (DEA) in the Ministry of Finance and presented by the Finance Minister.

How Union Budget is Prepared?

The budget preparation process begins in the third quarter of the financial year. Initially, the budget circulars will be distributed to ministers and departments, collecting data on current and past fiscal and estimating future financial needs.

The financial minister aided by advisors and bureaucrats initiates consultations and will gather suggestions from various sectors.

The second step involves the estimation of expenditures. The financial advisors will prepare an estimate and after discussion, the expenditure secretary will consolidate them into a budget estimate for the upcoming fiscal year.

Then comes the revenue projection which is one of the vital parts as it determines the government’s capacity to fund its activities for the upcoming fiscal year. The process involves assessing various income streams and balancing economic streams with fiscal strategies.

The third step involves the estimation of the deficit. Comparing the projected expenditures against the expected revenues will give the initial fiscal deficit. According to this, the government could decide the optimal level of borrowing to finance the deficit.

Later, the government will find tools to narrow the deficit. This is mainly handled by revising the tax rates or finding new revenue sources if the deficit is larger than desired.

The final budget is then presented on the first working day of February. After the presentation, the budget will go through the legislative process, involving the introduction and passage of the Appropriation Bill and the Finance Bill. These bills need approval from both the houses of Parliament and the President’s assent to become law.

In the case of an interim budget, the formal approval of the budget extends beyond the beginning of the fiscal year and thus government seeks a vote on account.

This enables the government to meet essential expenses and keep the administration running until the full budget is passed.

If any dispute over the resource allocation occurs, they are often sent to the Union Cabinet or the Prime Minister for a final decision.

Simultaneously, the Finance Ministry collaborates with taxation departments to project future tax revenues. These projections, coupled with expenditure plans, form the Union Budget.

Before presenting the budget in the Parliament, the Halwa ceremony takes place and it is usually conducted before the commencement of the budget printing process.

Read also: “Lies, Cheats And Demeans Women”: Indian Billionaire Vs Elon Musk Over Trump

In this ceremony, traditional desert halwa is prepared and served to officials and staff members of the finance ministry involved in the preparation of the Budget.

After the culmination of the process, the presentation of the Union Budget takes place on February 1. During the election years, the Budget is presented twice.