The Indian Union Budget is created by the Ministry of Finance, working with Niti Aayog and other relevant ministries. The Budget division of the Department of Economic Affairs (DEA) in the finance ministry is the main group responsible for making the Budget.
What is the Union Budget?
The Union Budget of India, known as the annual Financial Statement in Article 112 of the Constitution of India, is presented every year in Parliament on the last working day of February by the Finance Minister. Before it takes effect on April 1, marking the start of India's financial year, the budget must be approved by the House.
The roots of the modern Budget can be traced back to the Norman period, where finance was handled by two departments—the Treasury and the Exchequer. The term "budget" comes from the old French word "bougette," meaning a leather bag or wallet. Its first recorded use may date back to the 1733 financial statement by Walpole, the Prime Minister and Chancellor of the Exchequer.
Initially, "budget" only referred to the Chancellor's annual speech on the nation's finances. Today, it signifies an annual financial statement detailing a government's income and expenditure.
Table of Content
Understanding the Budget Process
In the Indian budget process, the Finance Minister, aided by advisors and bureaucrats, seeks input from industry leaders and economists. Various organizations related to accounting and finance share their opinions and suggestions. Bureaucrats play a significant role in influencing the outcomes of the budgeting exercise, which typically begins in the third quarter of the financial year. The budget process involves four stages: estimating expenditures and revenues, determining the initial deficit, narrowing the deficit, and finally presenting and obtaining approval for the budget.
Steps in the Preparation of the Union Budget
The preparation of the Union Budget in India involves several key steps:
The Indian Union Budget is a complex process involving multiple stages and meticulous attention to detail. The Ministry of Finance, in collaboration with Niti Aayog and other ministries, crafts the budget, with the Budget division of the Department of Economic Affairs playing a central role. The modern budget system has roots in the Norman period, evolving from a mere speech to a detailed financial statement outlining the government's income and expenditures. Final decisions on budgetary allocations and priorities shape the financial landscape for the upcoming fiscal year.
Frequently Asked Questions
Budget management is influenced by factors like economic conditions, government policies, and unexpected events impacting revenue and expenses, affecting financial planning and execution.
Budgeting processes provide structure, ensuring systematic planning, allocation, and monitoring of financial resources for effective organizational management and goal achievement.
The budget process is crucial for transparent financial planning, resource allocation, and goal alignment.
The budget process involves key stakeholders, including finance professionals, department heads, and executives. Collaboration with experts and relevant personnel ensures comprehensive financial planning and decision-making.
Budgets may face limitations due to unforeseen events, inaccurate predictions, and inflexibility. Over-reliance on historical data and changing economic conditions can challenge the effectiveness of budgetary plans.