Importance of Union Budget in India

Since India is a Union of States, the term "Union Budget" has gained prominence. The federal system of government in India was created by the Indian Constitution. It is known as the Union of States as a result. A federation of 28 States and 7 Union Territories has been founded in India.

The Republic of India's yearly budget is known as the Union Budget of India or the yearly Financial Statement under Article 112 of the Indian Constitution.

The French term "bougette," which means leather briefcase, is where the word "budget" first appeared. Previous budget announcements by finance ministers have been made with leather bags. When Sitharaman unveiled her first budget in 2019, the "bahi khata" took the place of the budget briefcase.

The nation has moved past its history as a colony to become a global economic force. The necessary framework for the government to implement policies and reforms for the benefit of regular taxpayers is also provided by the Union Budget.

Understanding the Importance of Union Budget

The Union Budget is more than just a financial statement. It also discloses the government's broad policy objectives and provides a framework for financial changes.

The overall goal of the Union Budget is to achieve quick and balanced economic growth for our country while also promoting social justice and equality. The goal is to assure optimal resource allocation, alleviate unemployment and poverty, narrow wealth and income disparities, control prices, and reform the tax system.

According to Articles 112-117 of the Indian constitution, parliament has the authority to adopt the budget. Article 112-117 states that any request for spending or demand for a grant can only be made with the President's recommendation.

Article 112 of the Indian Constitution states that the President is responsible for proposing the budget to the Lok Sabha. According to Article 77(3), the President has assigned the Union Finance Minister the responsibility of preparing the budget, commonly known as the yearly financial statement and piloting it through parliament.

Ministries, bodies, union territories, and states develop plans and submit them to the finance minister, who, after careful consideration, delivers them to Parliament.

Role of an RBI Chief in the Union Budget

The Union Budget is the government's yearly financial declaration that outlines the country's budgetary strategy for the coming year. It is created by the Ministry of Finance in collaboration with Niti Aayog and other relevant ministries. Before preparing the yearly budget, the Ministry of Finance has Pre-Budget meetings and consults with various stakeholders.

There is no direct involvement of the Reserve Bank of India (RBI) in the Union Budget. However, inputs from the RBI on macroeconomic data are crucial in formulating fiscal policies and initiatives included in the budget. The RBI Governor finalises and announces the report on the fiscal condition, which assists the finance ministry in drafting the budget. The RBI then examines the budget and formulates monetary policy appropriately.

The RBI supervises overdrafts granted to the government. It is a confidential document that is kept in both Houses of Parliament. It is developed by Finance Ministry staff exclusively by the Government's policy instructions.

It should be noted that the RBI is in charge of the country's monetary policy, including note issuance, interest rate fluctuations, and foreign currency control. The government determines budgets and fiscal policies, and the RBI has no say in the country's fiscal policy.

Conclusion

The Union Budget of India serves as a comprehensive financial roadmap, reflecting the government's policy priorities and economic strategies. It aims to foster balanced growth, social justice, and resource optimization. While the RBI's role is indirect, its inputs on macroeconomic data significantly influence fiscal policies, ensuring a collaborative approach to economic governance.