Union budget of India

Union budget of India
Country	India
Caption	The budget is presented in the Parliament.
Presented by	Minister of Finance
Presented to	Lok Sabha
Website	[https://www.indiabudget.gov.in/ indiabudget.gov.in]

Union budget of India. The annual financial statement of the Government of India, it outlines the estimated receipts and expenditures for a fiscal year, which runs from April 1 to March 31. Presented by the Minister of Finance to the Lok Sabha, it is a comprehensive economic plan detailing taxation, government spending, and fiscal policy. The budget's passage is a critical constitutional event, governed by Article 112 of the Constitution of India, and serves as a primary tool for the executive to implement its economic agenda through the Parliament of India.

Overview

The document is formally known as the Annual Financial Statement under Article 112 of the Constitution of India, mandating the government to present estimates of revenue and expenditure to Parliament. It classifies expenditure into two main categories: the Consolidated Fund of India, which covers all government revenues and loans, and the Contingency Fund of India, reserved for unforeseen expenditures. Key fiscal targets, such as the fiscal deficit and revenue deficit, are announced, influencing the nation's credit rating and investor confidence. The budget speech, delivered by the Finance Minister in the Lok Sabha, is a major political and economic event, broadcast nationally and scrutinized by institutions like the Reserve Bank of India and National Stock Exchange of India.

History

The first budget of independent India was presented on November 26, 1947, by then Finance Minister R. K. Shanmukham Chetty. The tradition of the budget speech at 5 PM, initiated by Morarji Desai in the 1960s, was changed in 1999 by Yashwant Sinha to 11 AM. Landmark budgets include the 1991 budget by Mannohan Singh, which ushered in major economic liberalisation, and the 1997 "Dream Budget" by P. Chidambaram, which significantly reduced tax rates. The merger of the Railway Budget with the main budget in 2017, under Arun Jaitley, marked a major structural change, ending a 92-year-old practice established by the British Raj.

Budget process

The process begins months in advance with consultations by the Ministry of Finance with various stakeholders, including the NITI Aayog, state governments, and industry bodies like the Confederation of Indian Industry. The Department of Economic Affairs plays a central role in drafting the budget, which is then approved by the Union Cabinet chaired by the Prime Minister. Following its presentation in the Lok Sabha, the budget is discussed, voted on, and must be passed by both houses of Parliament before the start of the new fiscal year on April 1. The Comptroller and Auditor General of India later audits the government's accounts.

Components and structure

The budget comprises the Annual Financial Statement, Demands for Grants, the Finance Bill, and the Fiscal Policy Statement. Revenues are primarily derived from Goods and Services Tax (GST), corporation tax, income tax, and customs duty. Expenditures are divided into capital expenditure, such as infrastructure projects, and revenue expenditure, which includes salaries and subsidies. Major allocations are made to key ministries like the Ministry of Defence, the Ministry of Road Transport and Highways, and the Ministry of Education. The Finance Bill contains proposals for new taxes or amendments to existing laws like the Income Tax Act, 1961.

Economic impact and significance

As the government's primary fiscal tool, the budget directly influences economic growth, inflation, and employment through its spending priorities and tax policies. Allocations to sectors like agriculture, digital infrastructure, and manufacturing aim to stimulate specific areas of the economy. The announced fiscal deficit target signals the government's borrowing needs, affecting interest rates and the bond market monitored by the Securities and Exchange Board of India. International agencies like the International Monetary Fund and World Bank analyze the budget for its impact on India's macroeconomic stability.

Recent budgets and trends

Recent budgets have emphasized capital expenditure on infrastructure, green energy initiatives, and support for MSMEs. The 2021 budget, presented by Nirmala Sitharaman, introduced a significant asset monetization plan and increased health spending following the COVID-19 pandemic. The 2022 budget continued the focus on Gati Shakti for infrastructure and expanded the scope of the Digital rupee. A notable trend has been the simplification of the tax regime and the increased use of technology for compliance, overseen by the Central Board of Direct Taxes. The budget's presentation is now accompanied by a "Bahikhata" or tablet, symbolizing a move towards a paperless process.

Category:Government budgets of India Category:Economy of India