Everything About the Union Budget of India

What is Union Budget of India:

Article 112 of the Constitution of India refers to the Union Budget of India as the Annual Financial Statement. It is the annual budget for the Republic of India. To materialize it before the new financial year in April, the government presents it on the first day of February. The Finance Minister used to present it in Parliament on the last working day of February until 2016. Lok Sabha must pass the budget, which is presented in the Finance Bill and Appropriations Bill, before it can be implemented on 1 April, which marks the beginning of the fiscal year for India. Generally, Union Budgets are geared towards the key pillars of the economy, such as:

• Education, Health, and Welfare
• Financial and Physical Capital and Agricultural Development.
• Towards the development of an aspirational India
• Through Human Capital Regeneration
• Research and Development
• In addition, the budget is based on regulations relating to the securities market, direct taxes and indirect taxes.

Interim budgets are distinct from votes on the account. A 'Vote on Account' focuses only on government expenditures. The interim budget includes receipts and expenditures. Interim budgets provide a complete financial summary, very similar to a full budget.

Despite the fact that the law does not prevent the Union government from introducing tax changes during an election year, successive governments have avoided introducing major changes in income tax laws when the interim budget was announced. 73 annual budgets, 14 interim budgets, and four special budgets, or mini-budgets, have been presented since 1947.

Which Finance Minister Presented the Most Number of Budgets in India?

As the highest number of budgets presented, Morarji Desai presented 10 followed by P Chidambaram's 9 and Pranab Mukherjee's 8. Yashwant Sinha, Yashwantrao Chavan, and C D Deshmukh presented seven budgets each and Manmohan Singh and T T Krishnamachari have each presented six budgets.

Union Budget of India’s Traditions:

Time of Union Budget Announcement:

Before 1999, the Union Budget was announced at 5:00 pm on the last working day of February. The practice dates back to colonial times. The purpose behind this tradition is to give the British an opportunity to relax at their place at the time of 11:30 am. Indian politicians have clearly been influenced by colonial mindsets.

In addition, until the 1990s, all that budget did was raise taxes. This meant producers and tax collectors had the night to figure out the change in prices before they presented their budgets. Under PM Atal Bihari Vajpayee, Yashwant Sinha, then the Finance Minister of India in the NDA government (led by the BJP), introduced the 11 am announcement of the 1999 Union Budget. It was first done in 2001.

Date of the Union Budget Announcement:

In 2016, Minister of Finance (India) Arun Jaitley, in the NDA government (led by the Bharatiya Janata Party) of Narendra Modi announced that the Union Budget would now be presented on the first day of February instead of the last day of February as had been the tradition since colonial times. Furthermore, the Rail Budget, which has been separated from the union budget for 92 years, has been merged.

Halwa Ceremony and Union Budget Briefcase:

Approximately one week before presenting the budget in Parliament, the budget documents are printed with a 'Halwa ceremony during which large quantities of halwa are served to the staff involved with printing and presenting. While the Budget is being prepared, they remain isolated in their North Block offices. Minister of Finance serves halwa. Before starting important work in India, the tradition of enjoying something sweet is conducted.

Change in Bahi Khata in the Union Budget of India:

The first paperless budget was presented by Finance Minister Nirmala Sitharaman on 1 February 2021. The move was necessary because of the ongoing COVID-19 pandemic in India. This move has removed the Bahi Khata. Furthermore, it is seen as a step towards bolstering Prime Minister Narendra Modi's ambitious 'Digital India' campaign.

Who is the Father of the Indian Budget?

The very first Indian budget was presented by James Wilson, who is known as the father of Indian budgets.

Who Presents the Union Budget?

It is presented by the Finance Minister.

Who was the First Finance Minister of India?

The first budget of Independent India was presented by RK Shanmukham Chetty, the Finance Minister.

What is the Process for Planning the Union Budget?

Taking into account the foreseeable expenditures and the sources of revenue, the responsible ministry prepares the budget. The sources of income serve as a platform for generating revenues to cover expenses. Governments generally generate revenue by levying taxes, collecting interest from loans granted to state governments, levying fines and fees, and collecting dividends from public sector enterprises. These revenue streams are used to finance the following activities:

• Defense, security, and staff salaries
• Providing goods and services to the public
• Adherence to laws and regulations

Budgets or yearly budgets for governments in India are calculated by taking into account the above-mentioned expenditures coupled with generated revenue. Due to the similar revenue used every year to cover expenditures, both factors are equally important. The government is required to present the annual budget to parliament under Article 112. A financial year begins on April 1 and ends on March 31 of the following year.

The Union Budget and Its Components:

Union budgets are further divided into two components. One is the capital budget, while the other is the revenue budget. Throughout the year, both components ensure the smooth running of numerous tasks and programs essential to the nation's economy.

Capital Budget: It identifies the receipts that further reduce the government's assets. These receipts also create financial liabilities. Capital expenditures provide the government with more assets while reducing liabilities at the same time. Therefore the capital budget accounts for both assets and liabilities under one roof.

Revenue Budget:As its name implies, it accounts for revenue. A revenue budget is comprised of revenue receipts and expenditures that will be met from these receipts. Tax revenue and non-tax revenue that the government receives from multiple sources comprise these receipts.

States Budget: Each state is going to receive a certain amount for development in various sectors as part of the Union Budget. Such a budget is called the State Budget. In some ways, "State Government Accounts" and "Union Government Accounts" are similar. State governments should prepare a statement for every fiscal year containing information about expected receipts and expenditures. These documents must be mandated by every state:

• Budget Speech
• An Overview of the Proposed Budget
• Details on Grants
• A Complete Budget Book

The Union Budget's Importance/ Importance of the Union Budget:

Putting forward quick and balanced economic growth as the sole purpose of the Union Budget. Following are the highlights depicted below in order to gain a good understanding of the significance of the Indian Budget or Union Budget:

Allocation of Significant Resources: To foster economic growth, it is essential to utilize all available resources in the best way possible. In order to maximize profit, resources should be allocated in an optimal manner. Additionally, government funds can be allocated to public welfare in a more effective and efficient way.

Unemployment & Poverty Reduction: Poverty reduction is another vital role played by the Union Budget. The budget also seeks to create more jobs for its citizens. By having such opportunities available, India's citizens will be able to cope with the basic needs of food, clothes, and shelter on a day-to-day basis. Healthcare and education also fall under this category.

Reduce Income Inequalities and Wealth Disparities: With the help of subsidies as well as taxes, the budget works towards influencing the overall distribution of income. The high tax rate ensures that the rich class has a smaller disposable income, as a result of the high tax rate. Additionally, lower-income groups are taxed at a lower rate in order to ensure sufficient in-hand income to cover daily necessities.

Monitor Prices: By monitoring the ongoing economic fluctuations, the Union Budget maintains a tight budget. Furthermore, it ensures inflation and deflation cases are handled correctly. Additionally, it contributes to economic stability. As the economy is inflating, the government implements surplus budget policies. However, when the economy is deflating, the government implements deficit budget policies. Deficit budget policies assist in managing prices and ensuring price stability.

Changes in the Tax Structure: The Union Budget not only outlined the above pointers but also discussed various options related to direct and indirect taxes. An amendment to tax brackets can be made in a specific year according to this chart.