What is Union Budget of India?
The dictionary meaning of budget is a systematic plan for the expenditure of a resource during a given period.
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 expenditure of the government for that particular year. Union Budget is classified into Revenue Budget and Capital Budget.
Revenue budget consists of the government's revenue receipts and expenditure mostly from these revenues. There are two kinds of revenue receipts - tax and non-tax revenue. Revenue expenditure is the expenditure incurred for the normal day to day functioning of the government and on various services offered to citizens. If revenue expenditure exceeds revenue receipts, the government incurs a revenue deficit.
Capital Budget includes capital receipts and capital payments of the government. Market loans, Loans from public, foreign governments and RBI form a major part of the government's capital receipts. Capital payments is the expenditure on acquisition and development of land, machinery, equipment, building, health facilities, education etc. Fiscal deficit is incurred when the government's total expenditure exceeds its total revenue.
Thus, Union Budget, which is a yearly affair, is a comprehensive display of the Government’s finances. It is the most significant economic and financial event in India. The Union budget is preceded by an Economic Survey which outlines the broad direction of the budget and the economic performance of the country.
The budget, which is presented by means of the Finance bill and the Appropriation bill has to be passed by both the Houses before it can come into force.
Change in Time of Budget:
Up to the year 1999, the Govt was announcing the Union Budget at 17:00:00 Hrs. on the last working day of the month of February each year. This was being followed from the beginning i.e. from the time when British Govt was controlling India. At that time of British Raj, the British Parliament would pass the budget in the noon followed by India in the evening of the day. In the year 2001, the then Finance Minister of India Mr. Yashwant Sinha from India Govt, which was led by Atal Bihari Vajpayee, changed the timing to 11:00:00 Hrs. And, it has become a tradition since then.
Why there is change in date of Budget?
The Cabinet on 21 September had in-principle decided to end the colonial-era tradition of presenting the budget on the last working day of February - which was generally 28th February and 29th February during a leap year - and advance it by a month, so that the legislative approval for annual spending plans and tax proposals could be completed before the beginning of the new financial year on 1 April.
Change in Date of Budget:
Up to the year 2016, the Govt was announcing the Union Budget on the last working day of the month of February each year (mostly 28th or 29th of February). This was being followed from the beginning i.e. from the time when British Govt was controlling India. At that time of British Raj, the British Parliament would pass the budget in the noon followed by India in the evening of the day. In the year 2017, the Finance Minister of India Mr. Arun Jaitley from the Govt of India led by Narendra Modi has changed the date to 1st February. It’s like departing the colonial era tradition which was being followed by the India Govt for such a long time. Prime Minister Narendra Modi on 26 October had given a clear indication that Budget 2017 would be presented a month in advance. Urging the states to align their plans according to the revised date of budget presentation, Modi had said the new system would ensure speedier implementation of schemes. Timely Implementation on 26 October, the prime minister had urged all states to align their plans with this advancement, so that they could take maximum advantage of this move.
Railway Budget, merging it with the Union Budget:
Before British ruling there was no rail service in India. During that period Rail service was started in India. The British considered it as the most important infrastructure network. Since 1924 (last 92 years) the Railways has been a separate budget by keeping its importance and volume of work. We all know currently India’s rail network is world’s largest rail network. In September, 2016 the cabinet has decided to merge the Rail budget with Union Budget. This decision was mooted by Railway Minister Suresh Prabhu and endorsed by NITI Aayog.
As a part of Indian Tradition before doing any important work we use to serve some sweets. Same tradition also being followed for budget by the Finance Ministry. Around one to two week before the budget, the printing of the budget document papers uses to start. The sweet i.e. Halwa is prepared and served to all those officers and staffs who all are part of this process. This ceremony is called as Halwa Ceremony.
How will the new move help?
By advancing the budget by one month, it’s expected that the Finance Bill to be passed and implemented from 1 April onwards, instead of June. The Finance Bill will be passed in the Parliament in the next two months — February and March. All the corporate and household will get two more-month time for their planning for savings, tax plans and tax investment plans.
Area of concern:
Data is the most important part for preparing the budget. By advancing the budget to 1st February, in this year there will be lesser data to analyze. With a little less data proper planning is required to make a significant budget.