Unveiling the Union Budget of India
The Union Budget of India, an annual financial statement, is a testament to the nation’s fiscal policies and economic aspirations. Woven into the very fabric of India’s Constitution, the budget is a vital element that propels the country’s economic growth. This comprehensive exploration will delve into the constitutional foundations of the Union Budget, elucidating the key components and shedding light on the pivotal role of the Finance Minister in shaping India’s financial destiny.
Constitutional Basis of the Union Budget of India:
The constitutional framework governing the Union Budget is rooted in several key articles of the Indian Constitution, most notably Article 112. This article mandates the President of India to lay before Parliament a statement of estimated receipts and expenditures for each financial year. This statement is the crux of the Union Budget, aptly named the Annual Financial Statement (AFS).
What are the Constitutional Provisions regarding Budget?
According to Article 112 of the Indian Constitution, the Union Budget of a year is referred to as the Annual Financial Statement (AFS).
Article 112 of the Constitution requires the President of India to cause the annual financial statement (i.e. the budget) to be laid before the Parliament on the last day of February or the first working day thereafter.
It is a statement of the estimated receipts and expenditure of the Government in a Financial Year (which begins on 1st April of the current year and ends on 31st March of the following year).
Overall, the Budget contains:
Estimates of revenue and capital receipts,
Ways and means to raise the revenue,
Estimates of expenditure,
Details of the actual receipts and expenditure of the closing financial year and the reasons for any deficit/surplus in that year, and
The economic and financial policy of the coming year, i.e., taxation proposals, prospects of revenue, spending programme and introduction of new schemes/projects.
In Parliament, the Budget goes through six stages:
Presentation of Budget
General discussion
Scrutiny by Departmental Committees
Voting on Demands for Grants
Passing an Appropriation Bill
Passing of Finance Bill
The Budget Division of the Department of Economic Affairs in the Ministry of Finance is the nodal body responsible for preparing the Budget.
The first Budget of Independent India was presented in 1947.
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The Process of Preparing Union Budget
Article 112 – Annual Financial Statement: Union Budget of India
Article 112 of the Constitution of India lays down that it is a statement of the estimated expenditure and receipts of the Government for a particular year.
Article 112 lays down the foundational mandate for the Union Budget. It specifies that the President shall, at the commencement of every financial year, cause to be laid before both Houses of Parliament a statement of the estimated receipts and expenditures of the Government of India for that year. The AFS is a comprehensive document that delineates the financial roadmap of the government for the upcoming fiscal year.
The Budget keeps the account of the finances of the government for the fiscal year (from 1st April to 31st March).
The Budget is presented on 1st February (until 2016, it was presented on the last working day of February) so that it can materialise before the commencement of the new financial year which starts on 1st April.
In 2017, a 92-year-old tradition was broken when the railway budget was merged with the Union Budget and presented together.
The Budget has to be passed by the Lok Sabha before it can come into effect.
The Union Budget is divided into Revenue Budget and Capital Budget. For more on these terms, check Union Budget – Important Economic Terms.
In the Union Budget, the disbursements and receipts of the government comprise the various types of government funds in India namely, the Consolidated Fund of India, the Contingency Fund and the Public Account.
The Economic Survey of India is released ahead of the presentation of the Budget.
Revenue and Capital Expenditure:
The Annual Financial Statement is divided into two main components: The Revenue Budget and the Capital Budget. The Revenue Budget deals with the government’s day-to-day operational expenses, including salaries, subsidies, and interest payments. On the other hand, the Capital Budget focuses on expenditures that lead to the creation of assets, such as infrastructure development and investments.
Fiscal Deficit:
Fiscal prudence is emphasized in Article 112 by highlighting the concept of fiscal deficit. The fiscal deficit is the difference between the government’s total revenue and total expenditure, excluding borrowings. This mechanism ensures that the government does not resort to excessive borrowing, maintaining fiscal discipline.
Appropriation Bills (Article 114):
Article 114 of the Constitution requires the government to present a separate account of the receipts and expenditure of the Consolidated Fund of India, which includes the revenues of the central government and certain other funds, as well as all money received by the government through loans.
Another crucial aspect of the Union Budget is the passage of Appropriation Bills, as mandated by Article 114. These bills empower the government to withdraw funds from the Consolidated Fund of India, which houses all government revenues. The passage of Appropriation Bills is a parliamentary check to prevent misuse or arbitrary expenditure of public funds.
Article 266 of the Constitution requires the government to credit all revenues received by it, including taxes and other revenues, into the Consolidated Fund of India, unless otherwise provided by law.
Article 266(2) of the Constitution requires the government to withdraw money from the Consolidated Fund of India only after it has been authorized by a law passed by the parliament. This ensures that the government cannot withdraw money from the Consolidated Fund without the approval of the parliament.
Article 270 of the Constitution requires the government to present a statement of the estimated receipts and expenditure of each state government, which is called State Budget.
Article 272 of the Constitution requires the government to transfer certain specified taxes and duties to the states and union territories.
The Role of the Finance Minister:
At the heart of the Union Budget presentation is the Finance Minister, a key player responsible for crafting and delivering the budget speech. The Finance Minister’s role extends beyond mere presentation; it encompasses the formulation of economic policies, financial planning, and management of public funds. Let’s dissect the multifaceted role of the Finance Minister in the Union Budget process.
The budget is presented by the Finance Minister of India in the Parliament. The budget is a comprehensive document that outlines the government’s economic and fiscal policies for the next fiscal year.
The budget is an annual financial statement that lays out the government’s proposed expenditures and revenues for the upcoming fiscal year, which begins on April 1st and ends on March 31st of the following year.
The budget is presented by the Finance Minister of India in the Parliament. The budget is a comprehensive document that outlines the government’s economic and fiscal policies for the next fiscal year.
Budget Formulation: The Finance Minister, along with the Ministry of Finance, spearheads the formulation of the Union Budget. This intricate process involves consultations with various stakeholders, including industry experts, economists, and policymakers. The Finance Minister’s team analyses economic trends, revenue projections, and expenditure requirements to craft a budget that aligns with the government’s broader economic agenda.
Policy Direction: The Union Budget is not just a numerical presentation; it is a policy document that reflects the government’s priorities and vision for the nation. The Finance Minister articulates the policy direction through the budget speech, elucidating the government’s stance on taxation, expenditure, and economic reforms. This speech serves as a guide for Parliament and the public, outlining the rationale behind key budgetary decisions.
Tax Proposals: One of the most closely watched aspects of the Union Budget is the announcement of tax proposals. The Finance Minister has the authority, derived from the Constitution, to propose changes in the taxation structure. This includes direct taxes like income tax and indirect taxes such as goods and services tax (GST). The Finance Minister’s decisions on taxes impact individuals, businesses, and the overall economic landscape.
Parliamentary Presentation: The Finance Minister presents the Union Budget in Parliament, a momentous event that sets the tone for economic discussions and debates. The presentation involves a detailed overview of the government’s fiscal policies, proposed expenditures, revenue projections, and policy initiatives. The Finance Minister’s ability to communicate complex financial matters with clarity and conviction is crucial for garnering support and understanding from fellow parliamentarians and the public.
Parliamentary Scrutiny: The budget is subject to rigorous scrutiny in both Houses of Parliament. The Finance Minister engages in debates, answers questions, and addresses concerns raised by members. This parliamentary scrutiny ensures transparency, accountability, and a thorough examination of the budget’s implications for different sectors and segments of the population.
Conclusion:
In conclusion, the Union Budget of India is more than just a financial document; it is a constitutional imperative and a visionary roadmap for the nation’s economic journey. Enshrined in the Constitution, the budget reflects the principles of democracy, accountability, and fiscal responsibility. The Finance Minister, as the architect of this financial blueprint, plays a pivotal role in steering India’s economic course, making decisions that resonate across the vast and diverse landscape of the country. As we await each annual budget presentation, we witness not just a fiscal statement but a manifestation of India’s economic ambitions and the collective aspirations of its citizens.
Official Website of Indian Budget: Click Here
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