Budget of India

Budget of India
Name	Budget of India
Country	India
Presented by	Nirmala Sitharaman
Presented date	1 February
Fiscal year	1 April – 31 March
Legislature	Parliament of India
Approving body	Lok Sabha
Former names	British Raj era estimates

Budget of India The Budget of India is the annual financial statement presented to the Parliament of India by the Finance Minister of India that outlines proposed revenues, expenditures, and fiscal priorities for the upcoming fiscal year. It reflects policy decisions influenced by macroeconomic indicators such as Gross Domestic Product, fiscal deficit targets endorsed by the RBI, and commitments to international agreements like the Sustainable Development Goals. The statement connects to administrative and constitutional frameworks established by the Constitution of India and implemented through institutions including the Union Budget process and fiscal instruments managed by the Ministry of Finance.

History

The modern fiscal practice traces to fiscal arrangements during the British East India Company and the British Raj when the India Office and the Viceroy of India oversaw estimates and the Indian Councils Act 1861 influenced financial administration. Post-independence transitions involved the Constituent Assembly of India and early leaders such as Jawaharlal Nehru and C. D. Deshmukh shaping the first budgets, with the First Five-Year Plan and Second Five-Year Plan altering expenditure patterns. Events like the Green Revolution (India) and the balance of payments crisis of 1991 prompted reforms connected to actors like Manmohan Singh and institutions such as the International Monetary Fund and the World Bank. Later milestones involved reforms under Atal Bihari Vajpayee and the introduction of the Goods and Services Tax by administrations including Narendra Modi's, following recommendations from the Narasimham Committee and the Kelkar Committee on fiscal consolidation.

Preparation and Approval Process

Preparation begins within the Ministry of Finance's Department of Expenditure and Department of Revenue with inputs from line ministries such as Ministry of Health and Family Welfare and Ministry of Defence (India), state inputs via the Finance Commission and consultations with bodies like the Reserve Bank of India and NITI Aayog. The process uses guidelines from the Controller General of Accounts and procedures under the Appropriation Act and the Finance Act. The Budget Session of Parliament provides the forum for presentation by the Finance Minister of India to the Lok Sabha and subsequent scrutiny by departmental committees including the Standing Committee on Finance and debate in the Rajya Sabha before passage.

Structure and Components

The statement comprises documents such as the Annual Financial Statement, the Finance Bill, the Demand for Grants, and annexures including the Medium-Term Fiscal Policy Statement and the Macroeconomic Framework Statement. Major components categorize revenues (taxes administered by the Central Board of Direct Taxes and the Central Board of Indirect Taxes and Customs), non-tax receipts (returns on investments from public sector undertakings like Indian Oil Corporation and Coal India Limited), and expenditures on schemes such as the Mahatma Gandhi National Rural Employment Guarantee Act and allocations to institutions like the Indian Railways and the All India Institute of Medical Sciences. Balance measures include borrowing via the Government Securities (G-Secs) market and fiscal tools overseen by the RBI.

Fiscal Policy and Economic Impact

Fiscal policy choices in the budget—tax reform, subsidy rationalization, and capital expenditure—affect macro aggregates monitored by the International Monetary Fund and credit rating agencies such as Moody's Investors Service and S&P Global Ratings. Budget allocations influence sectors with targeted interventions like Pradhan Mantri Awas Yojana in housing, Pradhan Mantri Jan Dhan Yojana in financial inclusion, and investment in infrastructure projects related to the Bharatmala and Sagarmala programmes. The budgetary stance also interacts with monetary policy set by the Monetary Policy Committee of the Reserve Bank of India and external factors such as oil price shocks tied to OPEC member states and global trade players like People's Republic of China and the United States.

Budgetary Institutions and Roles

Key institutions include the Ministry of Finance, the Department of Economic Affairs, the Department of Expenditure, and the Controller General of Accounts, working with the Reserve Bank of India, the Comptroller and Auditor General of India, and the Finance Commission to implement, audit, and recommend fiscal frameworks. Parliamentary oversight is exercised by committees such as the Public Accounts Committee and the Estimates Committee. Administrative execution involves agencies such as the Comptroller and Auditor General of India for audit, the Central Board of Direct Taxes for taxation, and state finance departments that coordinate through the Inter-State Council and the Goods and Services Tax Council.

Major Budgetary Reforms and Milestones

Reforms include the post-1991 liberalization led by P. V. Narasimha Rao with Manmohan Singh as Finance Minister of India initiating structural adjustments, introduction of the Goods and Services Tax following recommendations of the Kelkar Task Force and political consensus among leaders like Arun Jaitley, and fiscal rules articulated in reports by the Fiskal Policy Committee analogues such as the Fiscal Responsibility and Budget Management Act, 2003. Other milestones involve disinvestment policies affecting Bharat Petroleum Corporation Limited and Air India privatization, adoption of outcome budgeting frameworks inspired by international practices from the Organisation for Economic Co-operation and Development and reforms to subsidy delivery through Direct Benefit Transfer systems leveraging identifiers like Aadhaar (India).

Category:Finance in India